SMM Aluminum Market Morning Review (2013-1-11)

SHANGHAI, Jan. 11 (SMM) – China’s trade surplus surged to USD 31.62 billion in December, well above forecasts. China’s soaring exports greatly boosted market confidence. The Bank of England and European Central Bank decided overnight to keep interest rate unchanged as expected. The US dollar index lost support at 80 as a result. Short-covering helped LME aluminum break through resistance at USD 2,100/mt and stabilize at all moving averages during the European session. Total positions were down 1,348 lots. Finally, LME aluminum closed at an intraday high of USD 2,120/mt, up USD 42.5/mt or 2.05%. Latest LME aluminum inventories decreased 4,750 mt to 5,191,900 mt.

China’s inspiring December trade figures will help push aluminum prices up at the bottom. LME aluminum should test support at USD 2,100/mt and fluctuate in the band of USD 2,095-2,145/mt on Friday. The SHFE 1303 aluminum contract is expected to challenge resistance at RMB 15,300/mt, with prices between RMB 15,250-15,330/mt. Traders will actively move goods as the delivery date of the current-month contracts approaches, but downstream producers should purchase only limited amounts, with spot discounts expected between RMB 10-30/mt. Overall trading volumes will increase slightly.