SHANGHAI, Jun. 13 (SMM) – The US May non-farm employment increased more than expected by 175,000, implying sustained recovery of the US economy. However, this also ignited fear that the US Federal Reserve may wind down QE3. China’s CPI climbed 2.1% YoY in May, but PPI shrank unexpectedly to 2.9% YoY. China's industrial production expanded 9.2% YoY in May, but was down MoM. Industrial output in the euro zone grew 1.4% MoM in April, but fell far short of the 0.9% jump in March. These disappointing data caused LME aluminum to snap an 8-day winning streak and shed more than 3.40%. LME aluminum ended Wednesday down 0.86% at USD 1,871/mt. LME aluminum inventories increased 15,725 mt to 5,214,150 mt, while positions were also up 1,054 lots to 768,043 lots.
Aluminum prices in China will be dragged down by falling LME aluminum following the three-day holiday. LME aluminum should test support at USD 1,850/mt and move within USD 1,850-1,880/mt on Thursday. SHFE 1309 aluminum contract is expected to open lower at RMB 14,680/mt, with prices between RMB 14,600-14,690/mt. In spot market, downstream producers will build stocks in modest amounts. Cargo holders will continue to hold offers firm against falling aluminum prices. Spot premium of RMB 20-60/mt is expected over SHFE 1306 aluminum contract prices.