SMM Daily Review - 2011/8/11 Base Metals Market

Most active SHFE aluminum contract prices opened lower at RMB 17,480/mt on August 11th, and broke through the 30-day moving average to a high of RMB 17,765/mt in the morning with strong long momentum. Due to profit-taking in the afternoon, most active SHFE aluminum contract prices finally closed at RMB 17,635/mt after falling slightly, up RMB 120/mt or 0.69%. Positions of most active SHFE aluminum contract fell by over 15,000 lots as a result of limited upward space. However, SHFE aluminum prices stood steady again at the 5-day moving average after previous plunge, which outperformed other metals. As aluminum prices stopped falling and stabilized, long confidence grew in response. SMM expects SHFE aluminum prices to struggle at RMB 17,600/mt in the short term.

Morning trading prices of spot aluminum in Shanghai on August 11th were between RMB 18,080-18,120/mt, with premiums of positive RMB 0-50/mt over SHFE current-month aluminum prices. During spot trading hours, SHFE current-month aluminum prices struggled at RMB 18,100/mt, and goods holders actively increased supplies with slight premiums. However, with the delivery date approaching, buying interest was low among purchasers due to premiums, which dragged down mainstream trading prices, market transactions were also rare. In the afternoon, as SHFE current-month aluminum price narrowly fluctuated near RMB 18,000/mt, spot premiums almost fell to zero. Mainstream trading prices in the afternoon were RMB 18,040-18,070/mt. Wait-and-see sentiment was strong in the market and no purchase was reported.