SMM Aluminum Market Morning Review (2014-4-2)

SHANGHAI, Apr. 2 (SMM) – China’s official manufacturing PMI for March finalized at 50.3, beating the preliminary reading. However, HSBC’s final China manufacturing PMI for March was revised down, causing LME aluminum to fall to USD 1,775/mt after opening at USD 1,784/mt on Tuesday. US manufacturing activity expanded for a second straight month in March and construction spending inched up 0.1% MoM in March. Downbeat Chinese manufacturing figure was offset by rosy US economic indicators, helping LME aluminum close USD 10/mt higher at USD 1,795.8/mt. Trading volumes contracted 1,551 lots to 17,894 lots, while positions gained 850 lots to 836,535 lots. 

On Tuesday night, SHFE 1406 aluminum contract slipped to RMB 13,000/mt after starting at RMB 13,030/mt, but then recovered some losses to end the night session at RMB 13,020/mt. Trading volumes totaled 3,044 lots, and positions decreased 12 lots to 118,276 lots.

Markets are optimistic over US ADP’s employment report due to be released today, but mixed economic data overnight will still keep some investors cautious. The most active SHFE aluminum contract should vacillate in a tight band of RMB 13,000-13,060/mt on Wednesday. In China’s physical market, spot discounts of RMB 200-240/mt are expected over SHFE 1404 aluminum contract.