SMM Daily Review – 2011/8/19 Aluminum Market

Most active SHFE 1111 aluminum contract gapped over 1% lower at RMB 17,070/mt on August 19th due to a plunge in global financial markets. In the morning, it quickly rebounded to struggle at RMB 17,200/mt following an intraday low of RMB 17,020/mt. Total positions of the contract climbed in the afternoon due to active longs, with a increasing trend slowing down later due to profit-taking. The SHFE 1111 contract finally closed at RMB 17,250/mt, down RMB 50/mt or 0.29% from previous trading day. Positive fundamentals helped SHFE aluminum prices back to fluctuating range of the week, and with strong support at RMB 17,000/mt, the most active contract are expected to test RMB 17,200/mt during this week. Latest SHFE aluminum inventories fell by 8,731 mt to 140,693 mt, which will provide support for SHFE aluminum prices in the short term.

Mainstream trading prices of spot aluminum in Shanghai were between RMB 17,670-17,700/mt on August 19th, with premiums of positive RMB 220-250/mt over SHFE current-month aluminum prices. Spot quotes were kept at RMB 17,700/mt in the morning as SHFE aluminum prices rebounded after gapping lower. Purchases slightly increased in the morning as downstream consumers built up their inventories, and supply of spot goods at lower prices turned scarce later due to increased purchases. In the afternoon, spot quotes were kept between RMB 17,670-17,700/mt though SHFE current-month aluminum prices hit RMB 17,500/mt. Inquiries in the afternoon were scarce, which led to zero transactions reported.