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SMM Brief on SHFE Aluminum Futures: Prices Range-Bound as Shorts Exit Ahead of Holiday (2013-6-6)
Jun 6,2013 17:34CST
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Source:SMM
The ADP National Employment Report shows 135,000 jobs were added in US private sectors in May, well below forecast.

SHANGHAI, Jun. 6 (SMM) – The ADP National Employment Report shows 135,000 jobs were added in US private sectors in May, well below forecast. This kept investors cautious about non-farm employment due to the released tomorrow and offset positive news from Aluminum Corporation of China (Chalco)’s cuts of 380,000 mt of aluminum capacity. As a result, SHFE 1309 aluminum contract failed to rise as appreciably as it did in the previous trading day. On the other hand, positive fundamentals in spot aluminum market did help SHFE aluminum resist price declines.

SHFE 1309 aluminum contract opened only RMB 15/mt higher at RMB 14,925/mt on Thursday. The most active SHFE aluminum contract sank to RMB 14,840/mt shortly after its opening as longs closed positions against depressed economic outlook. Later, SHFE aluminum for September delivery rebounded as shorts exited to avoid risks ahead of the upcoming three-day holiday in China, but still failed to break through RMB 15,000/mt as positions fell as much as 5,844 lots. Finally, SHFE aluminum for delivery in four months closed flat with yesterday at RMB 14,910/mt. 

Tightening supply against pre-holiday restocking by downstream producers helped the most active SHFE aluminum contract regain RMB 14,900/mt following earlier retreat from the mark. However, SHFE 1309 aluminum contract has entered “overbought territory” judging from KDJ line. Dim global economic prospect also poses resistance to SHFE aluminum. Tomorrow will be the last trading day before the Chinese Dragon Boat Festival. Markets are now eyeing US May non-farm payrolls. Investors should continue to pull out of the market to avert risks. In this context, SHFE aluminum for September delivery is expected to hover near RMB 14,900/mt tomorrow.  

 

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