SMM Aluminum Market Daily Review (2013-2-5)

SHANGHAI, Feb. 6 (SMM) – SHFE 1305 aluminum contract, the most actively traded aluminum contract, opened lower at RMB 15,300/mt on Tuesday. The contract dived to RMB 15,190/mt in early trading, down by almost 1%. Later, the contract pared some losses, but failed to return to RMB 15,300/mt due to the struggles between longs and shorts. Finally, SHFE 1305 aluminum contract closed at RMB 15,275/mt, down RMB 65/mt or 0.42%. Positions were up 3,664 lots to 58,776 lots. High spot inventories caused SHFE aluminum market to be vulnerable to declines and resistant to increases. Bargain-hunting after SHFE three-month aluminum prices slid helped prevented the contract from weakening further. SMM expects SHFE 1305 aluminum prices to struggle at RMB 15,300/mt for the foreseeable future.

On Tuesday, traded prices in the Shanghai spot market were between RMB 14,870-14,880/mt, and spot discounts were in the RMB 80-70/mt range. Prices of low-Fe aluminum were around RMB 14,980/mt. Lower opening in the SHFE aluminum market dragged down spot aluminum prices below RMB 14,900/mt, a new low for 2013, and the lowest since late July 2010. Market pessimism caused traders to reduce inventories, but generated little buying interest with the approach of the Chinese New Year holiday. In general, market trading stagnated.