LME Aluminum slipped to USD 2,017/mt

Greece will hold a new election after attempts to build a new government failed. Moody’s cut its ratings for several Italian banks, adding to worries towards European debt. The U.S. delivered mixed economic data overnight, driving up risk aversion and in turn the US dollar to 81. LME aluminum only closed down USD 2/mt or 0.1% at USD 2,024/mt overnight, though, as profit-taking by shorts, which led to a plunge of some 30,000 lots of positions, helped it rebound for several times. The light metal slipped to USD 2,017/mt, only USD 1/mt higher than the new low this year, and only hit USD 2,034.3/mt due to resistance at the 5-day moving average.

The market sentiment remains slightly bearish given lasting worries towards European debt, weakness in the global economy and sluggish demand. The US dollar may strengthen further today and LME aluminum may hit a new low of this year as it moves between USD 2,010-2,040/mt. The most active SHFE aluminum contract for August delivery should open near RMB 16,000/mt and hover between RMB 15,950-16,050/mt. Profit-taking by shorts will provide some support. Spot aluminum, stagnating at RMB 16,000/mt, should maintain slight premiums over the current-month contract for June delivery. Discounts should be within RMB 10/mt and premiums within RMB 30/mt. Deals will be limited given the strong wait-and-see sentiment of both buyers and sellers.