SMM Morning Review - 2012/6/18 Aluminum Market

SHANGHAI, Jun. 18 (SMM) – The Greek election led to cautious shorts standing on the sidelines. Weaker-than-expected May industrial output and Michigan University Consumer Confidence Index in the US rekindled stimulus expectations on Fed. The US dollar retreated, helping commodities rebound. LME aluminum, however, failed to take on the trend as other base metals did, hitting a new 2012 low and settling down USD 18.3/mt or 0.93% at USD 1,935.3/mt to extend its losing streak into the sixth trading day. Total positions increased 4,404 lots to 739,226 lots. Latest LME aluminum stocks were down 13,375 mt at 4,847,550 mt.

The possibility of a Greek euro exit has dropped and investor focus now goes to Fed stimulus expectations, which may push for a rebound of aluminum prices. LME aluminum should test pressure at the 10-day moving average and hover between USD 1,940-1,970/mt. The most active SHFE aluminum contract for September delivery should open higher near RMB 15,900/mt and test resistance at RMB 16,000/mt as it hovers between RMB 15,900-16,000/mt. Spot discount is expected to expand to RMB 40/mt after the current-month contract shifted. Spot aluminum supply is still excessive and trading should remain light.