SHANGHAI, Oct. 22 (SMM) – The US existing home sales slipped by 1.7% in September to an annual rate of 4.75 million units, far worse than in August. Meanwhile, the EU summit failed to make any progress in debt rescue, triggering worries over the weak global economy and sluggish consumption. The US dollar index rebounded as a result, weighing down commodities. LME aluminum retreated below USD 2,000/mt during the European session. With increasing short selling, total positions surged by 11,550 lots and LME aluminum lost all daily moving averages. Finally, LME aluminum closed at an intraday low of USD 1,969.5/mt, down USD 41/mt or 2.04%. Latest LME aluminum inventories were down 9,325 mt to 5,039,125 mt.

Aluminum prices will extend losses due to strong risk aversion. LME aluminum should be pressured under the 5-day moving average and move between USD 1,940-1,980/mt on Monday. The SHFE 1212 aluminum contract is expected to gap lower at RMB 15,380/mt on Monday, with prices between RMB 15,300-15,420/mt. Spot discounts are expected between RMB 70-110/mt as traders will actively move goods at the end of the month and as downstream producers should show little buying interest due to tight cash flows. Overall trading will be light.