LME aluminum to move between USD 1,850-1,880/mt: SMM Morning Review

Large-scale reverse repos by the People’s Bank of China on Tuesday raised expectations for more easing policies. Besides, expectations for stimulus policies from the ECB and Fed also helped boost market confidence. As a result, the US dollar index dropped below 82, adding momentum for commodities to rebound. LME aluminum broke through the 10-day and 20-day moving average to a high of USD 1,878.8/mt during European session. However, as investors stayed guarded, trading volumes were less than 10,000 lots and LME aluminum failed to hold onto the 20-day moving average at the tail of trading. Finally, LME aluminum ended the day up USD 29.8/mt or 1.62% at USD 1,868.8/mt. Latest LME aluminum inventories were down 4,225 mt to 4,909,950 mt.

With markets awaiting more positive news, cautiousness should prevail and aluminum prices will have limited upside space. LME aluminum will struggle at the 10-day moving average and move between USD 1,850-1,880/mt on Wednesday. SHFE 1211 aluminum contract is expected to open slightly higher at RMB 15,300/mt on Wednesday, with prices between RMB 15,230-15,330/mt. Spot aluminum prices are expected to continue to edge up. Cargo holders will actively move goods with long-term contracts as the month ends, while downstream consumption should be weak. Spot discounts are expected between RMB 0-40/mt.