LME aluminum should move between USD 1,820-1,860/mt: SMM Morning Review

The US economic data was mixed overnight. Building permits in the US jumped to four-year high in July and Philadelphia Federal manufacturing activity narrowed contraction in August compared with July, easing market risk aversion. German Chancellor Merkel’s promise to support the euro later in the day helped the euro to stage a strong rebound. In response, the US dollar index was under pressure, helping commodities rally. LME aluminum fluctuated during European trading session and slipped to a low of USD 1,827.3/mt, hitting the lowest for the year and also the lowest since October 2009. LME aluminum recovered early losses due to improved mood at the tail of trading. Finally, LME aluminum closed at an intraday high of USD 1,852/mt, up USD 12.3/mt or 0.67%. Latest LME aluminum inventories were up 1,375 mt to 4,893,175 mt.

Aluminum prices are expected to rebound limitedly on August 17, as markets are awaiting more positive measures and as technical indicators are weak. LME aluminum should meet strong resistance at the 5-day moving average and move between USD 1,820-1,860/mt on Friday. SHFE 1211 aluminum contract is expected to open higher at RMB 15,250/mt on Friday, with prices between RMB 15,200-15,300/mt. The influx of imported aluminum will make trading even thinner in spot aluminum markets. Spot discounts are expected between RMB 10-40/mt. Overall trading will be light.