SHANGHAI, Jul. 4 (SMM) – LME aluminum surged as much as 4.36% overnight to USD 1,993/mt, a new high since June 11th, amid strong short covering induced by rapidly increasing expectations on easing policies from both China and Europe. Transacted contracts doubled to 25,000 lots, a new high since December 30th, 2011. Lacking participation of longs, the light metal pared gains at the tail of trading, however, to USD 61.3/mt or 3.21%, settling at USD 1,971/mt. Latest LME aluminum stocks were down 10,025 mt at 4,812,625 mt.

As investors wait for easing policies, their confidence for aluminum is far from strong, and shorts may return if aluminum prices climb higher. LME aluminum is expected to meet resistance at USD 2,000/mt and move between USD 1,945-1,995/mt. The most active SHFE aluminum contract for October delivery should open near RMB 15,600/mt and fluctuate between RMB 15,500-15,700/mt as pressure at the 20-day moving average is strong. Weak fundamentals mean spot aluminum lacks upward momentum. As sellers and buyers remain split, spot prices are expected to see discounts of RMB 20-60/mt. Trading will be light.