SMM Daily Review - 2012/6/26 Aluminum Market

SHANGHAI, Jun. 27 (SMM) – The most active SHFE aluminum contract for October delivery started lower at RMB 15,530/mt and lost an heavy RMB 485/mt or 3.12% closing at RMB 15,065/mt, as a result of strong short-selling following announcement of power subsidy polices in Henan and Guizhou. It found its low at RMB 14,900/mt. Positions surged 25,480 lots to 121,108 lots. The most active SHFE aluminum contracts have lost nearly RMB 900/mt in June as output increases and power rate drops. Pressure from the two factors has been largely been digested and support at RMB 15,000/mt should be tested for the near term.

Spot aluminum traded at RMB 15,530-15,560/mt in Shanghai, with low-iron aluminum trading at RMB 15,620-15,680/mt. Some aluminum producers in Henan now enjoy power bill deferrals of RMB 0.08/kwh while smelters in Guizhou have a 10% cut in power rates. Spot discounts over the current-month SHFE aluminum price expanded to RMB 20/mt and the strengthening bearish market sentiment led to lighter trading. Trading activity was only slightly active after prices dropped to RMB 15,530/mt. Deals were quite sparse in the afternoon after the current-month contract slipped to RMB 15,200/mt as market players moved to the sidelines. Quotations were few and within RMB 15,300-15,400/mt.