SMM Morning Review - 2012/5/30 Aluminum Market

SHANGHAI, May 30 (SMM) – Investor worries towards Spanish debt stability have been increasing recent days, helping the US dollar index stand steady above 82. There are reports that the Chinese government will release a series of stimulus policies. These stimuli are also hinted to be weaker than those after the 2008 financial crisis, though, weakening rebound of commodities.

LME aluminum climbed above the 10-day moving average twice and hit a high of USD 2,035/mt on Tuesday, but settled down USD 12/mt or 0.59% at USD 2,015/mt weighed by weak US consumer confidence in May and a downgrade on Spanish debt. Positions dropped 4,094 lots to 715,295 lots and latest LME aluminum stocks dropped 7,725 mt to 4,937,600 mt.

The worsening debt stability in Spain will continue to weigh on markets. Aluminum’s strong resilience shown indicates it will continue to stagnate though. LME aluminum is expected to stay between 5-day and 10-day moving averages and hover between USD 2,005-2,035/mt today. The most active SHFE aluminum contract for September delivery should open near RMB 16,030/mt and struggle near the 10-day moving average. Its trading band should be RMB 16,000-16,060/mt. Spot trading activities will be quite low. Goods holders’ selling interest at low prices will drop this last two trading days in May and downstream buying will be even weaker. Spot discounts should be within RMB 30/mt and premiums within RMB 10/mt. Deals will be quite sparse.