LME aluminum should move between USD 2,020-2,065/mt on 10th Oct: SMM Morning Review

The International Monetary Fund (IMF) further revised down its forecast for global economic growth for 2012 and 2013 on October 9. The IMF also warned that global economy will continue to deteriorate unless the euro zone debt crisis and the US fiscal tightening are under control. The EU finance ministers meeting overnight failed to yield any progress, triggering strong market risk aversion and pushing the US dollar index up to 80.In response, LME aluminum retreated below the 30-day moving average to a low of USD 2,044/mt, falling most sharply among base metals and hitting a near one-month low. LME aluminum failed to narrow losses at the tail of trading. Finally, LME aluminum ended the day down USD 29/mt or 1.40% at USD 2,049/mt. Latest LME aluminum inventories increased by 9, 650 mt to 5,034,000 mt.

Aluminum prices will expand losses due to massive sell-off. LME aluminum should be pressured under the 30-day moving average and struggle at USD 2,050/mt, with prices between USD 2,020-2,065/mt on Wednesday. The SHFE 1212 aluminum contract is expected to open lower at RMB 15,600/mt on Wednesday and move between RMB 15,540-15,640/mt. With weak SHFE aluminum market and the imminent delivery date of the current-month contract, unwillingness to sell at low prices by cargo holders should help spot discounts narrow to RMB 50-10/mt. Downstream producers will purchase as needed and overall trading is expected to be thin.