SMM Aluminum Market Daily Review (2012-10-12)

SHANGHAI, Oct. 15 (SMM) – The SHFE 1212 aluminum contract opened slightly higher at RMB 15,530/mt on October 12. The most-traded contract retreated below RMB 15,500/mt again to a low of RMB 15,445/mt as longs took profits. In the afternoon, the contract for December delivery had limited upward momentum due to thin trading activities despite some dip-buying. Finally, the three-month contract closed RMB 50/mt or 0.32% lower at RMB 15,460/mt. Positions were up 36 lots to 60,646 lots. The most active SHFE aluminum contract was down 2% on a weekly basis due to strong risk aversion before the weekend. The SHFE 1212 aluminum contract is expected to be trapped within a tight band this week since investors are bearish towards aluminum prices while awaiting China’s economic data to be released this week.   

Spot aluminum was mainly traded between RMB 15,320-15,340/mt in Shanghai last Friday, with discounts between RMB 0-10/mt and premiums between RMB 0-10/mt. Low-iron aluminum was traded at RMB 15,390-15,400/mt. The SHFE 1212 aluminum contract rose slower than other base metals and the current-month contract expanded losses. However, cargo holders held quotations flat with the current-month contract due to dip-buying from downstream producers and middlemen. Trading improved from a day earlier. In the afternoon, the current-month contract stagnated around RMB 15,300/mt, triggering strong wait-and-see sentiment in spot aluminum market. Sparse transactions were concluded at RMB 15,310/mt. Most market players are bearish towards this week’s aluminum prices.