LME aluminum should move between USD 1,915-1,955/mt on 5th Sept.

The US ISM manufacturing PMI for August was 49.6 overnight, far below forecasts and the lowest since July, 2009. Manufacturing PMI of global three largest economies pointed to contraction in August, rekindling market apprehension over the global economy and helping the US dollar index rebound. Commodities had limited downside room, though, as downbeat data was twined with expectations for easing policies. LME aluminum jumped to a two-month high of USD 1,954/mt, up more than 1.4%. However, as investors took profits at highs, LME aluminum trimmed some gains at the tail of trading and trading volumes doubled to more than 18,000 lots. Finally, LME aluminum ended the day up USD 11.3/mt or 0.58% to close at USD 1,937/mt. LME aluminum gained most among base metals. Latest LME aluminum inventories were up 6,475 mt to 4,878,475 mt.

LME aluminum soared, but SHFE aluminum failed to follow. Therefore, aluminum prices will move narrowly until market direction becomes clear. LME aluminum should struggle at USD 1,935/mt and move between USD 1,915-1,955/mt on Wednesday. SHFE 1212 aluminum contract is expected to open at RMB 15,480/mt on Wednesday and resistance at RMB 15,500/mt will be strong, with prices between RMB 15,410-15,520/mt. Spot discounts are expected between RMB 90-50/mt. Overall trading should be light.