SMM Daily Review – 2011/7/28 Aluminum Market

Most active SHFE 1110 aluminum contract prices opened higher at RMB 18,270/mt on July 28, and surged by nearly 2% in the morning, hitting RMB 18,570/mt. In the afternoon, SHFE 1110 aluminum contract prices erased early gains due to stronger short momentum (short position momentum), and finally closed at RMB 18,360/mt, up RMB 150/mt or 0.82% from previous trading day. Total positions increased by nearly 50,000 lots as longs and shorts actively entered the market. Daily transaction volume increased significantly by 273,000 lots from previous trading day. As SHFE aluminum prices failed to break through RMB 18,400/mt for two successive days due to intense struggles between long and short investors, more upward momentum is needed for SHFE aluminum prices to rise further.

Traded prices of spot aluminum in Shanghai on July 28th were between RMB 18,610-18,650/mt, with premiums of positive RMB 0-30/mt over SHFE current-month aluminum prices. In the morning, after SHFE aluminum prices surged by nearly 2%, spot aluminum prices also jumped by 2.36%. As a result, selling interest significantly increased among goods holders. Some of the goods holders who had been previously building up inventories even offered quotes below SHFE current-month aluminum prices. However, due to current high prices, purchasing interest was quite low among downstream processors and even among middlemen, with spot premiums quickly narrowing to near zero. In the afternoon, after SHFE current-month aluminum prices fell below RMB 18,600/mt, offers for spot aluminum rose from slight discounts to slight premiums over SHFE current-month aluminum contract prices Mainstream traded prices of spot aluminum were between RMB 18,560-18,600/mt. Market transactions were extremely limited as purchases were rare.