SHANGHAI, Jul. 5 (SMM) – Trading activity was inactive overnight as US financial markets were closed for the Independence Day yesterday. Bailout issues in Greece and Portugal reignited market worries. On the other hand, the Bank of England and European Central Bank (ECB) decided to keep current interest rates unchanged. ECB President Draghi indicated there is still room for interest rate cuts over a long time to come as economy in the euro zone is still facing downward risks. His remarks weighed down the euro, but also appeased market concerns that Europe may follow the US in tightening monetary policy. A firm US dollar dragged down commodity prices. LME aluminum found its high at USD 1,816.5/mt during the European session before immediately falling back to USD 1,810/mt. Finally, LME aluminum trimmed USD 0.5/mt to close at USD 1,809.5/mt. LME aluminum inventories contracted 7,950 mt to 5,428,450 mt, but positions added 2,101 lots to 756,285 lots.
A firm US dollar will keep a lid on the light metal. LME aluminum will continue to test support at USD 1,800/mt and move within USD 1,800-1,830/mt on Friday. SHFE 1310 aluminum contract is expected to open lower at RMB 14,310/mt, with prices between RMB 14,250-14,350/mt. In spot market, downstream producers will show higher interest of stockpiling for the upcoming weekend, but plentiful supply will preclude any substantial spike in aluminum prices. Spot discount of RMB 0-20/mt and premium of RMB 0-20/mt are expected over SHFE 1307 aluminum contract prices.