SMM Aluminum Market Morning Review (2013-2-28)

SHANGHAI, Feb. 28 (SMM) – The US durable goods orders dropped more than expected to 5.2% in January, but US pending home sales rose more than expected by 4.5% in the same month. Mixed data clouded market direction. Although Federal Reserve Chairman Bernanke reiterated that QE will remain in place, LME aluminum still dipped to a low of USD 2,008/mt during European trading hours as shorts dominated. Trading volumes contracted, but positions were up 3,507 lots. Finally, LME aluminum ended the day down 0.73% at USD 2,019/mt. Latest LME aluminum inventories increased 5,325 mt to 5,161,100 mt.

Aluminum prices are vulnerable to declines. LME aluminum should test support at USD 2,000/m and fluctuate in the band of USD 2,000-2,040/mt on Thursday. SHFE 1305 aluminum contract is expected to open lower at RMB 14,830/mt, with prices between RMB 14,780-14,880/mt. In spot markets, wait-and-see sentiment will dominate the market on the last day of the month, with spot discounts expected between RMB 120-160/mt.