SMM Aluminum Market Morning Review (2013-7-12)

SHANGHAI, Jul. 12 (SMM) – Chinese Premier Li Keqiang recently emphasized the importance of pro-growth policy and economic restructuring, triggering anticipating that the central government will introduce economic stimulus soon. Fed Chairman Bernanke said the Fed will not taper off monetary stimulus for the foreseeable future, boosting market sentiment. This triggered a selloff of US dollar, pushing commodity prices up. However, the US initial jobless claims in the week ending July 6 rose to 360,000, souring investor sentiment. This helped the US dollar fall at a slower pace, forcing commodity prices to give back gains. LME aluminum touched a high of USD 1,847/mt during the European session, but pulled back at the tail of the session. Finally, LME aluminum closed at USD 1,831.5/mt, up USD 13.5/mt or 0.74%. LME aluminum inventories fell 8,325 mt to 5,417,100 mt, and positions decreased 6,736 lots to 765,365 lots.

The rebound in the US dollar will keep a lid on aluminum prices. LME aluminum should stagnate at USD 1,830/mt and move within USD 1,815-1,845/mt on Friday. SHFE 1310 aluminum contract will open at RMB 14,400/mt, with prices between RMB 14,350-14,450/mt. In spot market, traders will be eager to sell, but downstream restocking will be limited. Spot discount of RMB 0-30/mt and premium of RMB 0-10/mt are expected over SHFE 1307 aluminum contract prices.