SMM Daily Review - 2011/9/8 Base Metals Market

Most active SHFE 1111 aluminum contract opened higher at RMB 17,450/mt on September 8th, and fluctuated below the opening price due to profit-taking by the longs and position building at higher prices among the shorts. The contract rebounded at the tail of trading to the daily moving average on profit-taking by the shorts, and finally closed at RMB 17,435/mt, up RMB 60/mt or 0.35% from previous trading day. Positions of the contract increased 728 lots to 118,196 lots. Transactions of the contract dropped to over 20,000 lots as investors were cautious while waiting for China’s August CPI scheduled to be announced today. SMM expects resistance at RMB 17,450/mt to remain strong in the short term due to strong short momentum.

Traded prices of spot aluminum in Shanghai were between RMB 17,800-17,830/mt on September 8th, with premiums of positive RMB 10-40/mt over SHFE current-month aluminum prices. In the morning, the narrow range fluctuation in SHFE current-month aluminum price following a higher opening helped spot aluminum consolidate at above RMB 17,800/mt. However, as downstream buyers stayed back, mainstream traded prices quickly slipped and market transactions were rarely seen. In the afternoon, spot quotations were kept steady between RMB 17,800-17,810/mt, and only a few middlemen purchased at lower prices. Market transactions remained limited.