SMM Aluminum Market Daily Review (2013-6-20)

SHANGHAI, Jun. 21 (SMM) – LME aluminum fell into negative territory for a ninth straight day, causing SHFE 1310 aluminum contract to open 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.  

Mainstream traded prices for spot aluminum in Shanghai were RMB 14,540-14,560/mt on Thursday, a discount of RMB 0-10/mt and premium of RMB 0-10/mt over SHFE 1307 aluminum contract prices. Low-iron aluminum was traded around RMB 14,710/mt. US Federal Reserve Chairman Bernanke stated the Fed will scale back QE3 later this year and HSBC’s flash China manufacturing PMI for June hit a 9-month low, sending SHFE 1310 aluminum contract down RMB 100/mt. In response, spot aluminum traders were anxious to liquidate inventories, but downstream producers bought only as needed and middlemen were wary of purchasing. This drove mainstream traded prices down to RMB 14,550/mt. In the afternoon, the most active SHFE aluminum contract fell further, turning spot market even quieter.