SMM Aluminum Market Morning Review (2014-3-26)

SHANGHAI, Mar. 26 (SMM) – Richmond Fed’s manufacturing index inched down to -7 in March. US new home sales fell more than expected to a seasonally adjusted annual rate of 440,000 units in February. However, the Conference Board’s US consumer confidence index hit a 6-year high of 82.3 in March. This allowed LME aluminum to climb to USD 1,764/mt after opening at USD 1,730.8/mt on Tuesday, ending up USD 16.3/mt or 0.94% at USD 1,750.5/mt. Trading volumes gained 7,529 lots to 15,449 lots, and positions also added 3,004 lots to 83,656 lots. 

On Tuesday night, SHFE 1406 aluminum contract moved lower to RMB 12,905/mt after starting at RMB 12,950/mt due to profit booking at highs, closing the session at RMB 12,925/mt. Trading volumes totaled 11,240 lots, and positions were off 342 lots to 118,826 lots.

Expectations are running high that China will roll out stimulus packages to boost economic growth. This should offer upward momentum to the most active SHFE aluminum contract, but any upside room will be limited, with prices expected between RMB 12,880-12,980/mt on Wednesday. In China’s physical market, spot discounts of RMB 300-340/mt are expected over SHFE 1404 aluminum contract prices.