SMM Morning Review - 2012/7/23 Aluminum Market

SHANGHAI, Jul. 23 (SMM) – China’s confirmation of strict property curb will erode metals demand. The financial aid call of Valencia in Spain reignited worries towards the European debt crisis. The US dollar index surged above 83.5 on Friday, inducing losses across commodities. LME aluminum lost support at the 30-day moving average, hitting a low of USD 1,889.8/mt, before recovering slightly to close at USD 1,894.8/mt, down USD 46.3/mt or 2.38%. Positions dropped 8,347 lots as numerous longs chose to take profits. Latest LME aluminum stocks gained 29,875 mt to 4,832,425 mt.

Risk aversion has been reignited as investor focus shifts to debt-ridden European nations. LME aluminum is expected to be pressured at the USD 1,900/mt mark and hover between USD 1,868-1,908/mt lacking upward momentum. The most active SHFE aluminum contract for October delivery is expected to open lower near RMB 15,520/mt and meet heavy pressure at RMB 15,600/mt. Its trading band is projected to be RMB 15,480-15,580/mt. Spot discounts of RMB 40-90/mt will be seen as goods holders are eager to sell while demand is weak at month’s end. Deals to be concluded will be limited.