SMM Daily Review - 2011/9/15 Aluminum Market

After opening slightly lower at RMB 17,300/mt, most active SHFE 1111 aluminum contract climbed slightly to an intraday high of RMB 17,385/mt in the morning with weakening short momentum and longs entering the market at lower prices. In the afternoon, after Shanghai Composite Index erased earlier gains, the contract also dipped on profit-taking by the longs, and finally closed at RMB 17,335/mt, up RMB 15/mt or 0.09% from previous trading day. Positions of the contract decreased 298 lots to 119,556 lots. SMM expects the contract to struggle at the 20-day moving average in the short term due to coming standoff between weakening shorts and strengthening longs.

Traded prices of spot aluminum in Shanghai were between RMB 17,650-17,690/mt on September 15th, with discounts of RMB 0-50/mt over SHFE current-month aluminum price. In the morning, as SHFE current-month aluminum contract price opened lower and moved down to near RMB 17,700/mt with a price gap of around RMB 200/mt over SHFE 1110 aluminum contract price, goods holders actively touted their goods with discounts widening to RMB 50/mt, dragging down spot aluminum price to below RMB 17,700/mt for the first time since August 9th. Though this move attracted some downstream buyers to purchase, overall market supply was evidently excessive due to limited demand. In the afternoon, the bearish market sentiment slightly weakened following SHFE current-month aluminum contract’s return to RMB 17,700/mt, with a few quotations seen at RMB 17,650-17,700/mt. However, no market transactions were reported due to strong wait-and-see sentiment among both sellers and buyers.