SMM Brief on SHFE Aluminum Futures: Prices Plummet on Lackluster China Manufacturing Activity (2013-6-20)

SHANGHAI, Jun. 20 (SMM) – The US Federal Reserve decided Wednesday to keep QE3 in place, but will begin to scale back bond-buying program before the end of this year. This pushed the US dollar index up, driving LME aluminum into negative territory for a ninth straight day. In response, SHFE 1310 aluminum contract opened lower at RMB 14,460/mt on Thursday. HSBC’s flash China manufacturing PMI for June contracted to 48.3, a nine-month low. This sent A-shares and SHFE copper down, which in turn dragged SHFE aluminum for October delivery down below RMB 14,400/mt in the afternoon session. Finally, SHFE 1310 aluminum contract closed down 1.10% at RMB 14,360/mt. Trading volumes increased 2,038 lots to 16,400 lots, and positions surged 5,486 lots to 60,652 lots. The most active SHFE aluminum contract should be vulnerable at RMB 14,300/mt.