SMM Morning Review - 2012/2/3 Aluminum Market

SHANGHAI, Feb. 3 (SMM) – LME three-month aluminum contract initially dropped below USD 2,200/mt and net positions of the contract lost 28,000 lots due to profit taking by longs ahead of release of the latest US non-farm payroll data. The metal narrowed losses at the tail of trading with bargain hunting and closed down USD 61/mt or 2.69% at USD 2,210/mt.

Cautiousness will prevail during Asian trading hours due to a lack of confidence in better non-far payroll data from the US. As such, SMM expects three-month aluminum to test support at USD 2,200/mt and move between USD 2,190-2,250/mt during today’s trading. The most active SHFE three-month aluminum contract is expected to test support at the 20-day moving average and hover between RMB 16,140-16,260/mt. The SHFE current-month aluminum price is likely to drop below the RMB 16,000/mt mark, thereby leading to further losses in spot aluminum prices. Though the buying interest downstream has been weak, traders won’t easily let aluminum price drop below RMB 15,900/mt, which is expected to narrow spot discounts over the SHFE current-month aluminum price to RMB 50-100/mt.