LME aluminum should move between USD 2,100-2,130/mt on 14th Dec: SMM Morning Review

The European finance ministers have reached a deal overnight during the two-day EU summit that all banks in the euro zone will come under the ECB supervision, a big step towards banking integration in the region. Greece’s application for the next round of bailout funds was also approved during the summit. The US weekly jobless claims dropped sharply and far exceeded forecasts, indicative of improving labor market. However, these positive factors failed to give a boost to market confidence. The unsolved US fiscal cliffs triggered a sell-off of commodities at higher prices. LME aluminum gave back earlier gains and failed to hold onto the 5-day moving average. Finally, LME aluminum closed at an intraday low of USD 2,116.5/mt, down USD 28.5/mt or 1.33%. Latest LME aluminum inventories decreased 8,350 mt to 5,159,300 mt.

Worries over the debt issues in Europe and the US will trigger market risk aversion. LME aluminum should test support at USD 2,100/mt and fluctuate in the band of USD 2,100-2,130/mt on Friday. The SHFE 1303 aluminum contract is expected to open lower at RMB 15,350/mt, with prices between RMB 15,320-15,420/mt. Spot aluminum prices will lack upward momentum and this will trigger bearishness. Cargo holders should hold prices firm at RMB 15,000/mt. Spot discounts are expected between RMB 0-40/mt. Downstream stock replenishment should improve overall trading slightly.