SMM Aluminum Market Morning Review (2012-10-24)

SHANGHAI, Oct. 24 (SMM) – The US corporate earnings were downbeat in 3Q and the Richmond Fed’s manufacturing index for October tumbled to -7, far lower than forecasts. These, coupled with worsening debt crisis in Spain, caused investors to turn to the safety of the US dollar. In response, the US dollar index rose to test resistance at 80. LME aluminum extended losses during the European session and slid to a low of USD 1,929/mt, another fresh low for the month. However, dip-buying at the tail of trading helped LME aluminum regain some losses. Finally, LME aluminum closed at USD 1,951.3/mt, down USD 13.8/mt or 0.70%. Latest LME aluminum inventories decreased by 3,375 mt to 5,059,500 mt.

Aluminum prices will extend losses as HSBC flash China manufacturing PMI for October due today will likely remain under 50. LME aluminum should struggle at USD 1,950/mt and move between USD 1,925-1,965/mt on Wednesday. The SHFE 1212 aluminum contract is expected to open lower at RMB 15,350/mt on Wednesday, with prices between RMB 15,300-15,420/mt. Spot discounts are expected between RMB 60-100/mt as oversupply will be aggravated as the month ends.