SMM Aluminum Market Daily Review (2013-7-10)

SHANGHAI, Jul. 11 (SMM) – SHFE 1310 aluminum contract fell to RMB 14,200/mt after opening lower at RMB 14,230/mt on Wednesday. In the afternoon, shorts took profits after the US Federal Reserve released the minutes of June policy meeting, helping SHFE three-month aluminum contract recoup earlier losses. Finally, SHFE aluminum for October delivery ended the day flat with yesterday at RMB 14,260/mt. Trading volumes were off 294 lots to 17,436 lots, and positions increased 1,118 lots to 216,306 lots. Persistently weak SHFE aluminum kept investors puzzled about future price trends. Weak demand in China means aluminum prices will more likely fall rather than rise. 

Mainstream traded prices for spot aluminum in Shanghai were RMB 14,320-14,340/mt on Wednesday, 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 14,490/mt. The most active SHFE aluminum contract edged down, souring market sentiment. Traders rushed to sell for cash, but downstream producers and middlemen held to the sidelines, sending prices down to RMB 14,320/mt, the lowest in more than three years. Prices are expected to fall further given the slowdown in the Chinese economy and severe overcapacity in aluminum industry. In the afternoon, trading was thin, with traded prices at RMB 14,320-14,330/mt.