LME aluminum should move between USD 1,900-1,950/mt on 22st Nov: SMM Morning Review

Greece failed to secure another round of bailout funds, aggravating worries over the European debt crisis and driving commodities down. The US economic data came in mild. The University of Michigan’s consumer sentiment for November was lower than estimates and preliminary reading, causing market risk aversion to grow. However, the retreat of the US dollar index from 81 failed to help LME aluminum rally. LME aluminum tumbled to a low of USD 1,929/mt and lost support at near the 30-day moving average as longs closed positions for a second straight trading day. Finally, LME aluminum ended the day down USD 20/mt or 1.02% at USD 1,936.5/mt. Latest LME aluminum inventories decreased by 6,000 mt to 5,166,500 mt.

Trading activity will be thin today as the US stock markets are closed for Thanksgiving Day and as investors are staying cautious while awaiting the flash manufacturing PMI for November in China and the euro zone. LME aluminum should meet resistance at USD 1,950/mt and move between USD 1,900-1,950/mt on Thursday. The SHFE 1301 aluminum contract is expected to open at RMB 15,280/mt, with prices between RMB 15,220-15,320/mt. Spot discounts should be between RMB 60-100/mt since traders will actively move goods for cash at the month’s end and as downstream producers will show little buying interest due to their bearish outlook.