SMM Aluminum Market Morning Review (2013-6-4)

SHANGHAI, Jun. 4 (SMM) – HSBC’s final China May manufacturing PMI hit an 8-month low of 49.2. US ISM manufacturing PMI fell unexpectedly to 49, the lowest level since June 2009. Manufacturing in the euro zone slipped into contraction for 22 months in a row. Faltering global economy undermined market sentiment, but also eased concerns that the US Federal Reserve will end QE3 soon. The US dollar index dived below 82.5, helping commodity prices resist declines. LME aluminum advanced to USD 1,938/mt, but then surrendered some of earlier gains, and finally closed 1% higher at USD 1,922/mt. LME aluminum inventories decreased 3,625 mt to 5,198,375 mt.

Downbeat economic data against a softer US dollar will keep the light metal hovering at high levels. LME aluminum should stagnate at USD 1,920/mt and move within USD 1,900-1,940/mt on Tuesday. SHFE 1309 aluminum contract is expected to open at RMB 14,900/mt, with prices between RMB 14,850-14,920/mt. In spot market, traders will hold quotes firm against tight supply, while downstream producers will purchase to orders. Spot discount of RMB 10-50/mt is expected over SHFE 1306 aluminum contract prices.