SMM Aluminum Market Morning Review (2013-1-4)

SHANGHAI, Jan. 4 (SMM) – Agreement was reached over the US fiscal cliff talks and December PMI in China and the US was positive, helping LME aluminum advance as much as 4.5% on the first day of 2013. However, the US employment data was mixed and the US fiscal issue still involves further budget negotiations, turning investors to the safety of the US dollar. The US dollar index surged as a result, weighing down commodity prices. Finally, LME aluminum closed at USD 2,112/mt, down USD 49/mt or 2.27%. Latest LME aluminum inventories increased by 2,150 mt to 5,212,500 mt.

Market is focusing on the US nonfarm payrolls for December. LME aluminum should struggle at USD 2,100/mt and fluctuate in a band of USD 2,080-2,120/mt on Friday. The SHFE 1303 aluminum contract is expected to open higher at RMB 15,400/mt, with prices between RMB 15,350-15,450/mt. In spot aluminum market, sellers and buyers should stand on the sidelines on the first trading day of 2013, with spot discounts expected between RMB 50-90/mt.