SMM Aluminum Market Morning Review (2013-7-4)

SHANGHAI, Jul. 4 (SMM) – The resignation of Portugal’s Foreign Minister yesterday sparked a political turmoil in the country. As a result, the country’s 10-year government bond yields soared 7% and stocks tumbled. US economic data released last night were mixed, driving investors out of the market before the Independence Day. The ADP National Employment Report says 188,000 jobs were added in the US private sector in June. Initial jobless claims fell to 343,000 last week, but layoffs grew 8.2% MoM in June, reflecting uncertainty in the US labor market. The US non-manufacturing PMI slipped to 52.2 in June, the lowest level since February 2010. These figures kept investors wary. As such, LME aluminum fell back from USD 1,830/mt during the European session to USD 1,805/mt. Finally, LME aluminum shed USD 14.8/mt or 0.81% to close at USD 1,810/mt. LME aluminum inventories contracted 8,275 mt to 5,436,400 mt, and positions fell 2,544 lots to 754,184 lots. The US financial markets will be closed today for the Independence Day. Markets will be cautious ahead of the US non-farm employment report due tomorrow, which will send the low-end price of LME aluminum down.   

Aluminum prices will inch down as markets are cautious ahead of the US non-farm employment report. LME aluminum will test support at USD 1,800/mt and move within USD 1,800-1,830/mt on Thursday. SHFE 1310 aluminum contract is expected to open lower at RMB 14,350/mt, with prices between RMB 14,300-14,390/mt. In spot market, ample supply against soft demand will keep spot aluminum prices at a discount of RMB 0-40/mt over SHFE 1307 aluminum contract prices.