SMM Daily Review - 2012/5/11 Aluminum Market

SHANGHAI, May 14 (SMM) – The most active SHFE aluminum contract for August delivery settled down RMB 70/mt or 0.43% at RMB 16,065/mt on Friday, after opening lower at RMB 16,120/mt. Transacted contracts climbed to 20,000 lots. SHFE aluminum futures prices dropped continually last week, with the most actively traded contract slipping toward RMB 16,000/mt. The weak CPI data has weakened expectations of demand in the conventionally peak season. Aluminum prices have shown relative stability, though, with strong support at RMB 16,000/mt. SMM expects the light metal to struggle at RMB 16,100/mt in the near term. Latest SHFE aluminum stocks dropped 4,171 mt to 347,032 mt.

Spot aluminum traded at RMB 16,020-16,040/mt in Shanghai, at discounts or premiums within RMB 10/mt over the current-month SHFE aluminum price. A slight drop in April’s CPI and weak economy added to expectations of stimulus. Spot aluminum tracked SHFE aluminum and dropped to near RMB 16,000/mt. Goods holders’ selling interest was quite weak at low-end prices and deals were done at current-month SHFE aluminum prices. Stocks replenishments from downstream were rarely seen. Purchases were still made on an as-needed basis. The wait-and-see sentiment was strong. The overall traded volume was flat. In the afternoon, goods movements were hardly seen. A few traders entered the market but were unable to find supply at low-end prices. Quotations were sparse and fell into RMB 16,030-16,050/mt. Deals were hardly concluded as the wait-and-see sentiment was strong.