SMM Aluminum Market Daily Review (2013-1-22)

SHANGHAI, Jan. 23 (SMM) – SHFE 1303 aluminum contract prices opened slightly lower at RMB 15,170/mt on January 22. The contract bucked the trend by falling among base metals as longs liquidated positions, and slid further to RMB 15,150/mt in the afternoon. The most active SHFE aluminum contract did find strong support at the 5-day moving average and managed to recover some losses at the tail of trading. Finally, the March aluminum on the SHFE closed RMB 5/mt or 0.03% lower at RMB 15,175/mt. Positions were down 1,470 lots to 56,670 lots. Investors were selling off SHFE aluminum contracts against bearish fundamentals in spot aluminum market. The most-traded SHFE aluminum contract rose much slower than other base metals and is expected to move within tight ranges in the near term, with strong resistance at RMB 15,200/mt.

Spot aluminum was mainly traded at RMB 14,950-14,960/mt in Shanghai on Tuesday, with discounts at RMB 120-130/mt. Low-iron aluminum was traded at RMB 15,040-15,050/mt. Arrivals of spot aluminum were limited in east China due to transportation delays, but oversupply pressure remained as downstream buying interest was low. SHFE 1303 aluminum contract prices bucked the trend by falling among base metals, continuing to dampen market sentiment. High spot discounts stimulated some middlemen to buy spot aluminum while selling off SHFE aluminum contracts. Spot aluminum prices stagnated at RMB 14,950/mt and the growth in trading volumes was limited. In the afternoon, prices of the most active SHFE aluminum contracts dropped further at the bottom. Some traders in spot market remained active in moving goods, with offers at RMB 14,950/mt. Bearishness dominated the market and overall trading was subdued.