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SMM Daily Review - 2011/12/26 Aluminum Market
Dec 27,2011 09:33CST
smm insight
SHFE aluminum for three-month delivery closed RMB 85/mt or 0.54% lower at RMB 15,800/mt and spot aluminum traded between RMB 16,000-16,040/mt in Shanghai.

SHANGHAI, Dec. 27 (SMM) – SHFE aluminum for three-month delivery opened slightly higher at RMB 15,900/mt but closed RMB 85/mt or 0.54% lower at RMB 15,800/mt on Monday. Despite of monetary easing expectations, the weak performance of the Shanghai Composite Index kept investor optimism back, with transactions for the contract only hitting 10,000 lots. SMM expects the three-month contract to stay near RMB 15,800/mt in the near term.

Mainstream traded prices of spot aluminum were between RMB 16,000-16,040/mt in Shanghai, with discounts of RMB 0-30/mt over the SHFE current-month aluminum price. In the morning, as SHFE current-month aluminum stayed near RMB 16,000/mt and traders mostly met their annual sales targets, the liquidating interest was low, which helped spot aluminum consolidate at the RMB 16,000/mt mark. Overall deals were limited. Sparse spot quotations in the afternoon stayed between RMB 16,000-16,020/mt even after the current-month SHFE aluminum dropped below RMB 16,000/mt. Deals, however, were hardly concluded.

In an SMM survey on future aluminum prices, 4% of market respondents for the first time in December hold hope for aluminum price development. Their confidence comes from the Chinese government’s target to protect economic growth in 2012 instead of price curb, power shortage, which is now spreading in Southwest China, and production cut and halt. 74% of respondents still expect little changes for aluminum prices in the near future, saying that traders mostly have met their annual sales targets and their present goals are to clear their stocks amid strong bearishness in the market. Remaining 22% of respondents said aluminum price will drop as stock replenishment demand is weak at year’s end and capital pressures will led to an even weaker demand.

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