SMM Aluminum Market Morning Review (2012/10/12)

SHANGHAI, Oct. 12 (SMM) – According to the release of the Department of Labor overnight, the US weekly new jobless claims dropped to 339,000 last week, beating forecasts and boosting market confidence on improvement of the job market in the country. In response, the US dollar index fell, helping LME aluminum stabilize above USD 2,000/mt during the European session. However, LME aluminum only climbed to USD 2,026.5/mt since investors were wary after the Spanish credit rating was downgraded. LME aluminum pared some gains at the tail of trading before finally ending the day up USD 11/mt or 0.55% at USD 2,018/mt. Latest LME aluminum inventories increased by 21,500 mt to 5,047,275 mt.
 

Aluminum prices will be trapped within a tight range as investors may exit the market before the weekend. LME aluminum should test support at USD 2,000/mt on Friday, with prices between USD 1,990-2,030/mt. The SHFE 1212 aluminum contract is expected to open slightly higher at RMB 15,530/mt and move between RMB 15,480-15,580/mt. Spot discounts will be RMB 0 -30/mt and premiums between RMB 0-10/mt due to the imminent delivery date. Trading is expected to improve mildly as supply should be ample and since restocking will increase moderately.