SMM Daily Review – 2011/7/27 Aluminum Market

Most active SHFE 1110 aluminum contract prices again opened higher at RMB 18,010/mt on July 27. In the morning, most active SHFE 1110 aluminum contract prices successfully broke through RMB 18,000/mt after 11: 00 a.m. and hit RMB 18,400/mt. At the tail of trading, most active SHFE 1110 aluminum contract prices slightly fell due to profit-making, and finally closed at RMB 18,310/mt after surging by RMB 440/mt or 2.46%. Total positions of most active SHFE aluminum contracts drastically increased by 54,536 lots to 212,894 lots. With both transaction volumes and prices rising, most active SHFE 1110 aluminum contract prices are expected to reach RMB 18,500/mt in the short term.

Mainstream traded prices of spot aluminum in Shanghai on July 27th were between RMB 18,190-18,210/mt, with premiums of positive RMB 60-90/mt over SHFE current-month aluminum prices. In the morning, as SHFE aluminum prices surged by a huge 2%, spot aluminum prices also rose by RMB 210/mt, which led to deterioration of buying interest among downstream buyers. Supplies by cargo-holders were scarce as they were building up inventories. Middlemen were cautious towards entering the market. As a result, market sentiment cooled down. In the afternoon, after rising of SHFE aluminum prices accelerated with SHFE current-month aluminum prices hitting an intraday high of RMB 18,400/mt, goods holders also raised their quotes with slight or zero premiums. As aluminum prices surged for two successive days, wait-and-see sentiment was turning strong among both suppliers and buyers. Inquiries were increasing despite extremely limited transactions.