SMM Aluminum Market Morning Review (2012/10/8)

SHANGHAI, Oct. 8 (SMM) – China’s manufacturing PMI for September unexpectedly rebounded to 49.8%, thanks to pro-growth policy in the country, but still pointing to contraction. The euro zone’s September manufacturing PMI signaled economic recession in the region was inevitable. LME aluminum prices struggled at USD 2,100/mt during the National Day holiday in China due to the absence of Chinese traders. The US nonfarm payrolls for September released last Friday was basically in line with expectations and the US employment rate surprisingly fell back to 7.8%, the lowest since 2009. Improved employment, however, failed to arouse much long buying. LME aluminum was weak on investors’ worries over the global economy. Finally, LME aluminum ended the day down USD 13/mt or 0.61% to close at USD 2,107/mt. Latest LME aluminum inventories were down 7,325 mt to 5,033,000 mt.

Investors will enter the market according to situations after the week-long holidays. Aluminum prices are expected to move weakly due to a lack of direction during the holidays. LME aluminum should struggle at USD 2,100/mt, with prices between USD 2,080-2,120/mt on Monday. SHFE 1212 aluminum contract is expected to open lower at RMB 15,700/mt on Monday and move between RMB 15,600-15,720/mt. Spot market will resume trading and downstream demand should remain after the holidays. Spot discounts are expected between RMB 80-40/mt. Trading should be light as wait-and-see sentiment will be strong at the beginning of the week.