SMM Aluminum Market Daily Review (2013-6-13)

SHANGHAI, Jun. 14 (SMM) – LME aluminum opened lower at USD 1,864.8/mt on Thursday due to worries over global economic prospects. Against this backdrop, SHFE 1309 aluminum contract also opened 1.7% lower at RMB 14,680/mt on the first trading day following the holiday. The most active SHFE aluminum contract, however, did climb to RMB 14,700/mt shortly after its opening thanks to short-covering and dip-buying by longs. SHFE aluminum for September delivery recouped only some of earlier losses as bearish sentiment is permeating, and later dropped as shorts closed positions. Finally, SHFE 1309 aluminum contract closed at RMB 14,705/mt, down RMB 235/mt or 1.57%. Positions were up 2,462 lots to 41,748 lots. Aluminum smelters cutting production and limited arrivals during the holiday helped aluminum prices in China resist declines compared with LME aluminum. SHFE aluminum for September delivery will repeatedly tests support at RMB 14,700/mt.

Spot aluminum was traded at RMB 14,820-14,830/mt in Shanghai on Thursday, a premium of RMB 20-30/mt over SHFE 1306 aluminum contract prices. Low-iron aluminum was traded around RMB 14,940/mt. SHFE 1309 aluminum contract opened lower on the first trading day following the three-day break in China, dragged down by falling LME aluminum during the holiday, while SHFE 1306 aluminum contract also slipped to stagnate at RMB 14,800/mt. Traders in east China held offers firm as limited shipments arrived over the holiday and as some aluminum smelters announced plans to cut production. Meanwhile, some downstream producers replenished stocks and delivery of SHFE current-month aluminum contacts is drawing near, keeping spot aluminum at a premium of over RMB 20/mt over SHFE 1306 aluminum contract prices. Trading was brisk at lower prices. Aluminum prices should remain resilient to declines tomorrow due to positive market fundamentals. In the afternoon, SHFE 1309 aluminum contract prices edged down, driving some traders to cut offers to RMB 14,810-14,820/mt. The lower price, however, failed to stoke buying interest.