SMM Daily Review - 2012/5/2 Aluminum Market

SHANGHAI, May 3 (SMM) – The most active SHFE aluminum contract for July delivery opened higher at RMB 16,200/mt and closed up RMB 125/mt or 0.77% at RMB 16,295/mt on Wednesday, following LME aluminum’s return above USD 2,100/mt and amid supportive polices that were launched during recent days. Positions of the contract dropped 2,284 lots to 61,710 lots as shorts cleared their positions. Positions of the August contract increased and may realize a shift of the most active contract today. SMM expects the most active SHFE aluminum contract to struggle at RMB 16,300/mt in the near term.

Spot aluminum climbed slightly to RMB 16,080-16,110/mt in Shanghai, but was still traded at discounts of RMB 0-30/mt over the current-month SHFE aluminum contract as demand stayed weak. Deals turned sparse after spot prices hit RMB 16,100/mt.

A 25% cut in stocks and futures trading charges in China announced during the May Day holiday, amid other supportive polices, and a slight and better-than-expected rebound of HSBC China PMI to 49.3 have fostered strong confidence in the market, with 75% of traders surveyed by SMM expecting higher aluminum prices this week while the remaining take a neutral view. However, as this week has only three trading days and in that spot aluminum still trades at discounts, the light metal won’t be able to add much.