LME aluminum should move between USD 1,950-2,000/mt on 15th Nov: SMM Morning Review

Market was absorbing positive news on the State Reserve Bureau (SRB)’s purchase of aluminum ingot, which has been postponed to Thursday. LME aluminum jumped to a high of USD 2,007/mt during the European session. However, the industrial output in the euro zone slid steeply in September from August, the biggest decline since 2009. Greece’s 3Q GDP also shrank considerably. The US retail sales for October fell for the first time since the second half of 2012. Weak European and US economy rekindled market worries, forcing LME aluminum to trim gains. Finally, LME aluminum closed USD 10.5/mt or 0.53% lower at USD 1,968/mt. Latest LME aluminum inventories decreased by 6,525 mt to 5,095,100 mt.

Market is eyeing how much the SRB is willing to pay for the aluminum ingot. If the bid price is higher than forecasts, aluminum prices will rise. If otherwise, aluminum prices will remain weak. LME aluminum should move between USD 1,950-2,000/mt on Thursday and the SHFE 1301 aluminum contract is expected to open at RMB 15,310/mt, with prices between RMB 15,270-15,370/mt. Spot aluminum should be traded at a discount of RMB 0-20/mt and a premium of RMB 0-20/mt as today is the last trading day of the 1210 aluminum contract. Supply should be ample, while downstream producers and middlemen will go bargain-hunting, so overall trading is expected to improve.