SMM Daily Review – 2011/8/25 Aluminum Market

Most active SHFE 1111 aluminum contract opened slightly lower at RMB 17,250/mt and closed RMB 40/mt or 0.23% higher at RMB 17,320/mt on August 25th. The contract hit an intraday high of RMB 17355/mt supported by a 3% surge in Shanghai Composite Index. Market transactions slightly rose to 50,000 lots during the day, but were still less than half those in previous week. SMM expects the contract to struggle at RMB 17,300/mt in the short term given strong resistance at the 60-day moving average.

Morning mainstream trading prices of spot aluminum in Shanghai were between RMB 17,760-17,790/mt, with premiums of positive RMB 190-220/mt over SHFE current-month aluminum prices. As SHFE aluminum prices stagnated, goods holders successively lowered their quotes to attract buyers, but ended with extremely limited transactions due to month-end capital pressure at downstream enterprises. Selling interest among goods holders increased in the afternoon after SHFE current-month aluminum prices hit RMB 17,600/mt, but trading prices slightly fell to RMB 17,740-17,760/mt and transactions were also rarely reported.