SMM Daily Review - 2012/3/19 Aluminum Market

SHANGHAI, Mar. 20 (SMM) – The most active SHFE aluminum contract for May delivery opened at RMB 16,145/mt and closed at RMB 16,165/t on Monday, after moving narrowly between RMB 16,145-16,175/mt. Transactions increased 1,692 lots to 4,394 lots while positions dropped 2,048 lots to 46,722 lots. Aluminum has been showing more stability due to light trading and high production costs.

Spot aluminum traded between RMB 15,960-15,990/mt in Shanghai, at discounts of RMB 40-70/mt over the SHFE current-month aluminum price. While downstream and middlemen continued to purchase as-needed expecting lower aluminum prices, goods holders’ firm quotations narrowed discounts over the dropping current-month aluminum price. Trading was light due to weak demand and as buyers and sellers diverge over price.

In an SMM survey on this week aluminum prices covering 32 aluminum traders, 8 (25%) traders expect gains, citing recovering domestic demand, slower stock expansion and strong support at the bottom. Further more, narrowing spot discounts over the SHFE current-month aluminum price also support their view. The percentage of optimistic traders was 8% last week. 20 (62%) traders expect stability, however, quoting weak demand, which will curb gains, and high production costs plus more financial strength at aluminum producers, which will on the other hand curb selling off. Remaining 4 (13) traders are pessimistic, saying climbing stocks and staying weak demand will induce losses to stagnating prices.