SMM Aluminum Market Morning Review (2012-10-29)

SHANGHAI, Oct. 29 (SMM) – The US 3Q GDP surprised market by growing by 2.0%, well above figures in 2Q, suggesting the US economy is recovering. As a result, LME aluminum rallied and regained losses seen in morning European session. However, sluggish consumption and high inventories triggered sell-off. Trading volumes and positions both increased, causing LME aluminum to tumble to a low of USD 1,920/mt, a fresh month’s low. Finally, LME aluminum ended the day down USD 13.3/mt or 0.68% at USD 1,924.8/mt, extending losses for six straight trading days. Latest LME aluminum inventories decreased by 6,000 mt to 5,052,625 mt.

Aluminum prices will be trapped within the negative territory due to a lack of progress on the debt aid in the euro zone, sluggish consumption and mounting inventories. LME aluminum should be pressured under the 5-day moving average and move between USD 1,900-1,940/mt on Monday. The SHFE 1212 aluminum contract is expected to open lower at RMB 15,330/mt on Monday, with prices between RMB 15,270-15,370/mt. Spot discounts are expected between RMB 60-100/mt due to ample supply and lower downstream buying interest at the month’s end.