SMM Morning Review - 2012/7/18 Aluminum Market

SHANGHAI, Jul. 18 (SMM) – While Fed President expressed deep worries towards weakness in the labor market during his testimony, there was no clear date for QE3, causing longs to close their positions to drag LME aluminum to a low of USD 1,892.3/mt. The light metal recovered slightly supported by bargain-hunting at the tail of trading, settling down USD 11.3/mt or 0.59% at USD 1,905.8/mt. Latest LME aluminum stocks added 6,625 mt to 4,806,475 mt.

After Fed disappointed over QE3, investors now focus on more easing from other economies. However, trading should be light before introduction of such policies. As such, LME aluminum is expected to struggle at the 10-day moving average and hover between USD 1,890-1,930/mt. SHFE aluminum for October delivery should start lower near RMB 15,565/mt and test support at RMB 15,500/mt. Its trading band should be RMB 15,500-15,600/mt. Spot discounts of RMB 20-60/mt can still be seen as traders increase supply while demand remains weak. Spot aluminum trading is expected to stay thin.