SMM Daily Review – 2012/7/27 Aluminum Market

SHANGHAI, Jul. 30 (SMM) - The most active SHFE 1211 aluminum contract opened slightly higher at RMB 15,370/mt on July 27. Later, short-covering helped the contract rise above the 5-day moving average to RMB 15,455/mt. The contract, however, failed to break through the 10-day moving average. Finally, SHFE three-month aluminum prices closed at RMB 15,330/mt, up RMB 120/mt or 0.78%. Positions were down 1,394 lots to 95,436 lots. The ECB president pledged overnight to keep the euro zone together, which helped boost the market confidence and forced the shorts to take profits. SHFE aluminum market advanced after a high open, but any gains were limited, as markets were looking for direction from more macro news. The most active contract should continue to test support at RMB 15,400/mt on Monday. Most traders delivered goods for cash as spot aluminum consumption was persistently weak and spot discounts stayed high. The latest SHFE aluminum inventories surged 12,212 mt to 325,297 mt in the week ending July 27.

Mainstream traded prices for spot aluminum were at RMB 15,450-15,480/mt in Shanghai on July 27, with discounts at RMB 20-50/mt and low-iron aluminum traded at RMB 15,540-15,550/mt. SHFE aluminum extended gains, with SHFE current-month contract testing resistance at RMB 15,500/mt. Most traders held quotations firm at RMB 15,460/mt despite the small amount of low-priced imported aluminum. Some traders held back on selling as the month ends. Some downstream producers replenished inventories before the weekend, picking up overall trading from the previous trading day. In the afternoon, sellers and buyers generally stayed out of the market, with limited quotations heard at RMB 15,460-15,470/mt. Wait-and-see sentiment was strong and overall trading was extremely quiet.