LME aluminum to move within USD 1,885-1,910/mt: SMM Morning Review

The markets were eyeing the interest rate meeting by the Fed and ECB overnight, raising high expectations on whether the ECB would deliver concrete measures to solve the debt crisis. The July Chicago PMI index and CCI by the Conference Board released later beat forecasts. However, Germany rejected draft measures granting ESM a banking license, adding resistance to the liquidity of the aid fund, causing commodities to pare gains seen earlier in the morning. LME aluminum fell back after touching a high of USD 1,912/mt during the European trading session. It later met strong resistance at the 30-day moving average before finally closing at USD 1,889/mt, down USD 9.5/mt or 0.50%. Latest LME aluminum inventories surged 46,575 mt to 4,886,725 mt.

Markets expect China’s manufacturing PMI data for July due today to rally, which should help aluminum prices to stabilize. LME aluminum should test resistance at USD 1,900/mt on Wednesday, with prices within USD 1,885-1,910/mt. The most active SHFE 1211 aluminum contract should open at RMB 15,440/mt on Wednesday and struggle at the 10-day moving average, with price range at RMB 15,400-15,500/mt. Wait-and-see sentiment should be strong among traders as finance pressures ease in early month. Downstream buying interest should remain low. Trading should stay light and discounts of RMB 20-60/mt are expected.