SMM Daily Review - 2012/5/28 Aluminum Market

SHANGHAI, May 29 (SMM) – Supported by slight gains in LME aluminum prices overnight, the most active SHFE aluminum contract for September delivery opened higher at RMB 16,030/mt, and settled up RMB 50/mt or 0.31% at RMB 16,045/mt on Monday, after a narrow struggle in RMB 16,020-16,040/mt. Positions added 4,158 lots to 91,720 lots. The bearish market sentiment eased, helping SHFE aluminum prices rise steadily and the most active SHFE aluminum contract consolidate at RMB 16,000/mt. The contract broke resistance at the 10-day moving average, but is expected to continue struggling near RMB 16,000/mt in the near term as longs lack confidence.

Spot aluminum traded at RMB 15,970-16,010/mt in Shanghai, at discounts of RMB 0-40/mt over the current-month SHFE aluminum contract. The light metal was sold at RMB 15,990-16,010/mt in Wuxi and Hangzhou. SHFE aluminum climbed above the RMB 16,000/mt mark but weak demand at month’s end has limited gains in aluminum spot. Some goods holders liquidated for cash at lower prices, expanding spot discounts to RMB 40/mt. Deals were limited while supply was sufficient.

SMM surveyed 24 aluminum traders this week, revealing an average aluminum price of RMB 16,006/mt in Shanghai. 8 of those traders expect higher aluminum prices, 15 are neutral while 1 expect losses.

The 8 optimistic traders say gains will be supported by a Greek poll revealing support for the nation to stay in the euro zone, loosening monetary polices in China and the approval of a batch of large industrial projects. The 15 neutral traders say Greece remains the source of uncertainty and Spain has emerged as a new contributor, which will weigh on aluminum prices, while balanced supply and demand will help the light metal stay at present levels. Their judgment is also supported by the movement of recent aluminum prices. The only one pessimistic trader quoted staying sluggish demand, the coming low-demand season and uncertainty in Europe. They also say support from policies need time to show.