SMM Aluminum Market Morning Review (2013-7-1)

SHANGHAI, Jul. 1 (SMM) – Worries over liquidity crunch in China eased last Friday, which was the last trading day of the first half of the year. US economic data released last Friday night was mixed. Chicago reported that its PMI for June fell to 51.6, the biggest monthly decline in more than four years. On the other hand, the University of Michigan Consumer Sentiment Index was revised up to 84.1 in the final reading for June. The US dollar index was firm at 83 as a result, keeping commodity price in check. LME aluminum tested support at USD 1,770/mt, and found its high at USD 1,797/mt, but later gave back gains due to sell-off at highs. LME aluminum fell to near the 5-day moving average at the tail of the session, and finally closed up USD 2.8/mt or 0.16% at USD 1,775/mt. LME aluminum inventories were off 6,875 mt to 5,435,600 mt, and positions were up 9,491 lots to 756,768 lots. 

Manufacturing PMI for June is eyed. LME aluminum should continue to test resistance at USD 1,800/mt and move within USD 1,760-1,800/mt on Monday. SHFE 1310 aluminum contract is expected to open at RMB 14,250/mt, with prices between RMB 14,200-14,300/mt. In spot market, wait-and-see sentiment will permeate, with spot discount of RMB 0-10/mt and premium of RMB 0-30/mt expected over SHFE 1307 aluminum contract prices.