SMM Daily Review – 2011/8/18 Aluminum Market

Most active SHFE 1111 aluminum contract prices opened slightly higher at RMB 17,345/mt on August 18th, and hit an intraday high of RMB 17,430/mt in the morning with longs buying at lower prices. In the afternoon, most active SHFE aluminum contract prices fell to a lowest RMB 17,200/mt due to profit-taking caused by weak market confidence. Finally closed price was RMB 17,205/mt, down RMB 70/mt or 0.41%. Total positions of the contract only increased 468 lots as a result of short-swing trading and profit-taking. SMM expects most active SHFE 1111 aluminum contract prices to keep fluctuating above RMB 17,200/mt in the short term due to a stand-off between longs and shorts.

Mainstream trading prices of spot aluminum in Shanghai during the day were between RMB 17,780-17,820/mt, with premiums of positive RMB 160-220/mt over SHFE current-month aluminum prices. Despite rising SHFE current-month aluminum prices during spot trading hours, spot premiums narrowed to below RMB 200/mt due to sluggish purchases, and transactions were rare at above RMB 17,800/mt. In the afternoon, after SHFE current-month aluminum prices dropped by nearly 1%, spot quotes fell slightly to RMB 17,720-17,750. However, no transactions were reported as downstream buyers and middlemen exited the market due to fluctuating SHFE aluminum prices.