SMM Aluminum Market Morning Review (2013-7-25)

SHANGHAI, Jul. 25 (SMM) – Markit's flash Eurozone Composite PM jumped to an 18-month high at 50.4 in July, marking the first time since 2012 that the index rose above 50. US manufacturing PMI also climbed to 53.2 in July and US new home sales hit the highest in five years at 497,000 in June. These upbeat data offset negative effect caused by China’s 11-month low flash manufacturing PMI, but also ignited fear that the US Federal Reserve may taper off QE3. LME aluminum broke through the 60-day moving average to a high of USD 1,858/mt, but trimmed gains at the tail of the session. Finally, LME aluminum ended the day at USD 1,846.3/mt, up a mere 0.01%. Positions increased 2,031 lots to 741,411 lots. LME aluminum inventories were down 6,200 mt to 5,460,300 mt. 

Mixed economic data will keep investors cautious. A firmer US dollar will keep aluminum prices in check. LME aluminum will move within USD 1,830-1,850/mt on Thursday, and SHFE 1310 aluminum contract will fluctuate between RMB 14,320-14,400/mt after a flat opening at RMB 14,375/mt. In spot market, traders will become more willing to sell as the end-of-month liquidity crunch bit in, but consumption will be sluggish. Spot discount of RMB 0-30/mt and premium of RMB 0-10/mt are expected over SHFE 1308 aluminum contract prices.