SMM Morning Review - 2012/5/28 Aluminum Market

SHANGHAI, May 28 (SMM) – The US May Michigan Consumer Confidence climbed to a new high since October 2007, beating expectations. However, debt woes of Greece and Spain continued to weigh on market. LME aluminum hit a high of USD 2,030/mt and fell back to settle up only USD 4/mt or 0.2% at USD 2,014/mt. Strong pressure was felt at the 10-day moving average while strong support showed at USD 2,000/mt. Positions increased slightly by 412 lots. Latest LME aluminum stocks dropped 12,425 mt to 4,943,900 mt.

Though European debt worries will not easily fade, improving consumer confidence in Europe and the US will boost commodities. LME aluminum is expected to struggle at the 5-day moving average and hover between USD 2,010-2,030/mt. The most active SHFE aluminum contract for September delivery should test support at RMB 16,000/mt and wander between RMB 15,980-16,080/mt. Most sellers and buyers will stand on the sidelines due to tightening cash flow at the month’s end and weak demand. Spot discounts and premiums should be within RMB 20/mt both. The wait-and-see sentiment should be the mainstream attitude on Monday and deals will be quite limited.