LME aluminum should move between USD 2,080-2,120/mt on Wednesday: SMM Morning Review

According to the US Commerce Department’s release overnight, the US trade deficit expanded in October, with exports declining 3.6%, the biggest fall since 2009. No progress has been made over the US fiscal cliff. Markets are staying cautious ahead of the results of the interest rate meeting by the Federal Reserve (Fed) due Wednesday night. The US dollar index pulled back as a result. LME aluminum hit a high of USD 2,142/mt during early European session, but later gave back some gains due to downbeat US trade data. Support at the 5-day moving average remained strong, though. Finally, LME aluminum closed at an intraday low of USD 2,112mt, down USD 14/mt or 0.66%. Latest LME aluminum inventories decreased 9,525 mt to 5,177,300 mt.

Markets are awaiting the result of the Fed interest rate meeting. LME aluminum should struggle at USD 2,100/mt and fluctuate in the band of USD 2,080-2,120/mt on Wednesday. The SHFE 1303 aluminum contract is expected to open lower at below RMB 15,400/mt, with prices between RMB 15,320-15,420/mt. Spot discounts are expected to narrow to RMB 0-40/mt as the delivery date of the current-month contract approaches. Traders will show high intention of moving goods due to weak aluminum prices. Downstream purchase should be stable before liquidity tightens at the year’s end, improving overall trading.