SHANGHAI, Jun. 21 (SMM) – The US Federal Reserve (Fed) announced it will keep QE3 in place, but Fed Chairman Bernanke said the US economic growth will be strong enough for the Fed to scale back USD 85 billion/month debt-buying program later this year and end the monetary stimulus next year. This pushed the US dollar index up. HSBC’s flash China manufacturing PMI for June shrank to 48.3, a 9-month low, dragged down by a sharp decline in new orders. This also marks the second month in a row that the index slipped below 50. This caused markets to panic, triggering massive sell-off of commodities. LME aluminum stabilized at USD 1,800/mt during yesterday’s Asian trading session, but retreated from this mark to USD 1,789.5/mt during the European session, off 2.4% and the lowest since October 2009. LME aluminum recovered some of its earlier losses at the tail of the session on short-covering before finally closing at USD 1,801.3/mt, down USD 1.80% and ending in negative territory for a ninth straight day. LME aluminum inventories soared 19,725 mt to 5,433,975 mt, while positions contracted 469 lots to 737,352 lots.
Worries over economic growth will weigh down the light metal, with LME aluminum meeting resistance at USD 1,800/mt and moving within USD 1,770-1,810/mt on Friday. SHFE 1310 aluminum contract is expected to open lower at RMB 14,300/mt, with prices between RMB 14,200-14,350/mt. In spot market, falling aluminum prices will drive traders to actively sell, but downstream buying interest will be tepid, with spot discount of RMB 0-30 and premium of RMB 0-10/mt expected over SHFE 1307 aluminum contract prices.