SMM Aluminum Market Morning Review (2014-4-1)

SHANGHAI, Apr. 1 (SMM) – LME aluminum slid to USD 1,753/mt after opening at USD 1,760/mt on Monday. The light metal, however, bounced back to USD 1,784/mt later in the day as Fed Chairwoman’s dovish comments sent the US dollar index down. Finally, LME aluminum finished the day at USD 1,782/mt. Trading volumes added 9,091 lots to 19,445 lots, and positions also gained 9,341 lots to 835,685 lots. 

On Monday night, SHFE 1406 aluminum contract climbed to RMB 13,075/mt after starting at RMB 13,045/mt, but then surrendered gains to end the night session at RMB 13,065/mt. Trading volumes totaled 9,104 lots, and positions increased 926 lots to 119,592 lots.

Investors are bearish about official and HSBC’s final China manufacturing PMI for March, but this has also raised expectations of government stimulus to keep the world's second largest economy moving forward. In this scenario, the most active SHFE aluminum contract should inch up to RMB 13,000-13,090/mt on Tuesday. In China’s physical market, increased liquidity at the start of the new month will help narrow spot discounts over SHFE 1404 aluminum contract to RMB 240-280/mt.