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

SHANGHAI, Jun. 5 (SMM) – SHFE 1309 aluminum contract opened slightly higher at RMB 14,900/mt on Tuesday, but then slipped to RMB 14,860/mt as longs closed positions. The most active SHFE aluminum contract dropped further in the afternoon on weak Shanghai Composite Index, but did recover some losses at the tail of the session before finally closing at RMB 14,860/mt, down RMB 15/m or 0.10%. Positions decreased 624 lots to 48,752 lots. Steep decline in Chinese and US May manufacturing PMI undermined market sentiment, but improving fundamentals in aluminum markets helped rein in losses of SHFE aluminum. SHFE aluminum for September delivery should hold steady at RMB 14,800/mt in the short term.

Spot aluminum was traded at RMB 14,820-14,830/mt in Shanghai on Tuesday, a discount of RMB 10-30/mt over SHFE 1306 aluminum contract prices. Low-iron aluminum was traded around RMB 14,960/mt. SHFE 1309 aluminum contract prices inched down, but SHFE 1306 aluminum contract prices bucked the trend by rising, allowing most traders to hold offers firm at RMB 14,830/mt. Downstream producers and middlemen purchased in modest amounts. The most active SHFE aluminum contract then fell further, depressing buying interest. Traders, though, still held prices firm. In the afternoon, SHFE 1309 aluminum contract prices fell further, hurting market sentiment Traders cut offers slightly to RMB 14,820/mt, but lower prices failed to stoke downstream buying interest, with only middlemen purchasing in small amounts.