SMM Aluminum Market Daily Review (2013-3-7)

SHANGHAI, Mar. 8 (SMM) – SHFE 1306 aluminum contract prices jumped to a high of RMB 15,000/mt and stabilized at the 10-day moving average after opening at RMB 14,840/mt on March 7. Finally, SHFE aluminum for June delivery closed at RMB 14,985/mt, up RMB 150/mt or 1.01%. Positions increased 6,118 lots to 90,960 lots. News that the State Reserve Bureau will buy aluminum ingot forced shorts to liquidate positions and helped SHFE aluminum prices lead gains among base metals. The most-traded SHFE aluminum should rise further to test resistance at RMB 15,000/mt in the short term.

SHFE 1306 aluminum contract prices bucked the trend by rising among base metals on Thursday, buoyed by news that the State Reserve Bureau (SRB) will buy 300,000 mt of aluminum ingot. However, spot aluminum prices failed to advance substantially due to mounting inventories. Mainstream trade prices in Shanghai were reported at RMB 14,470-14,500/mt, with discounts at RMB 120-150/mt. Low-iron aluminum was traded at RMB 14,630-14,650/mt. Most traders watched from the sidelines due to rising SHFE aluminum prices. Middlemen were active in bargain-hunting, allowing cargo holders to hold offers at above RMB 14,500/mt. Discounts of deliverable aluminum ingot over SHFE current-month aluminum contract prices were a mere RMB 50/mt. Traders with higher inventories still held quotations around RMB 14,480/mt. Downstream consumption was sluggish, with few transactions reported after prices rose above RMB 14,500/mt. Overall trading rebounded mildly. In the afternoon, SHFE aluminum prices remained firm, triggering strong wait-and-see sentiment in spot markets. Sparse offers were seen firm at RMB 14,500-14,520/mt, but buying interest was extremely low, leaving overall trading muted.