LME Aluminum slipped to USD 1,915.8/mt: SMM Morning Review

The US dollar index plunged, helping commodities rebound, after several emerging economies disclosed a USD 900 billion IMF capital injection to help contain the European debt crisis and with stronger expectations for Fed stimulus after US May housing starts trailed estimates. Weak fundamentals in China weighed heavily on LME aluminum prices, however, with the light metal gapping lower and slipping to USD 1,915.8/mt in early trading. Profit-taking by shorts at the trading tail helped it to narrow losses to only USD 0.8/mt or 0.04% when settling at USD 1,927.5/mt. Total positions plunged by 36,315 lots to 706,772 lots. Latest LME aluminum stocks were down 10,975 mt at 4,860,575 mt.

Investors are expecting support from the G20 Summit as well as the Fed interest rate meeting, but aluminum prices will remain weak before the two meetings deliver final results. LME aluminum should test pressure at the 5-day moving average and move between USD 1,910-1,940/mt today. The most active SHFE aluminum contract for September delivery should open near RMB 15,755/mt and fluctuate narrowly within RMB 15,700-15,800/mt. As downstream replenished stocks on Tuesday before the coming holiday, traded volumes in the spot market will drop today. Traders will quote with premiums of RMB 0-40/mt today being reluctant to move goods.