SMM Aluminum Market Daily Review (2013-3-5)

SHANGHAI, Mar. 6 (SMM) – SHFE 1305 aluminum contract opened slightly higher at RMB 14,630/mt on March 5, but slipped to RMB 14,600/mt in the morning session. In the afternoon, the Shanghai Composite Index staged a strong rally, triggering short-covering and helping the most active SHFE aluminum contracts recover losses. Finally, SHFE aluminum for May delivery closed at an intraday high of RMB 14,665/mt, up RMB 70/mt or 0.48%. Positions decreased 1,690 lots to 86,378 lots. Markets are confident about the central government’s economic work in 2013, counterbalancing worries from housing curbs. Nevertheless, investors were still cautious, limiting upside room of the most-traded SHFE aluminum, which should test support at RMB 14,600/mt in the short term. 

Spot aluminum was mainly traded at RMB 14,330-14,350/mt in Shanghai on Tuesday, with discounts at RMB 80-100/mt. Low-iron aluminum was traded around RMB 14,450/mt. Prices of the most active SHFE aluminum contract met resistance at high levels, keeping a lid on spot aluminum prices. Most traders were eager to sell, but downstream demand remained tepid. Some brand deliverable aluminum ingot and low-iron aluminum ingot were quoted at higher prices due to tight supplies, but overall trading was quiet. In the afternoon, some traders held quotations at RMB 14,350/mt, but later stood on the sidelines as SHFE 1305 aluminum contract prices rose. Low buying interest from downstream producers and middlemen depressed overall trading.