LME aluminum should move between USD 2,050-2,100/mt on Friday: SMM Morning Review

The Bank of England and European Central Bank (ECB) decided overnight to leave interest rates unchanged. The ECB revised down its economic forecast for the euro zone for the year of 2012 and 2013, increasing market worries and causing the euro to plunge. No progress had been made on the US budget negotiations. Investors are awaiting the US November nonfarm payrolls to be released today, helping the US dollar index regain 80 and putting downward pressure on commodity prices. LME aluminum struggled to hold onto USD 2,100/mt during early European session. However, LME aluminum had its upside space curbed by the firm US dollar and dived below the 5-day moving average. Finally, LME aluminum closed at an intraday low of USD 2,083/mt, down USD 22/mt or 1.05%. Latest LME aluminum inventories decreased 8,175 mt to 5,181,775 mt.

Bearish sentiment will dominate the market ahead of the release of the US nonfarm payrolls. LME aluminum should meet strong resistance at USD 2,100/mt and fluctuate in the band of USD 2,050-2,100/mt on Friday. The SHFE 1301 aluminum contract is expected to open lower at RMB 15,200/mt, with prices at RMB 15,170-15,270/mt. Bearish sentiment should turn stronger in spot aluminum market and downstream consumption will be sluggish. Still, some traders will hold back goods at lower prices. Spot discounts are expected at RMB 30-70/mt and overall trading will be limited.