SMM Aluminum Market Daily Review (2012-10-25)

SHANGHAI, Oct. 26 (SMM) – The SHFE 1212 aluminum contract opened at RMB 15,385/mt on October 25. The most active contract hovered around RMB 15,400/mt, with trading volume a mere 2,610 lots due to thin trading activity. Finally, the three-month contract shed RMB 5/mt to close at RMB 15,385/mt. Positions were up 258 lots to 56,770 lots. With bearish sentiment dominating the market, the contract for December delivery should meet stronger resistance at RMB 15,400/mt in the immediate term.

Spot aluminum was mainly traded between RMB 15,230-15,270/mt in Shanghai on Thursday, with discounts between RMB 110-70/mt. Low-iron aluminum was traded near 15,330/mt. The SHFE 1212 aluminum contract was resilient to declines, but rose slower than other base metals. Consumption of spot aluminum was persistently sluggish and pressure from overcapacity grew. Cargo holders were eager to move goods at lower prices due to cash tightness at the month’s end, but downstream producers purchased only limitedly at low prices, causing spot discounts to expand to RMB 100/mt. In the afternoon, the SHFE 1212 aluminum contract remained stagnant. Bearish mood remained, with sparse quotations between RMB 15,240-15,250/mt. Holders of certain brand goods even moved goods at RMB 15,200/mt. Deals were rarely done.