SMM Morning Review - 2011/10/14 Aluminum Market

The EFSF expansion was approved by all members of the euro zone, but failed to provide further support in global markets. China’s September import and export data dropped both on a yearly and a month basis. Trade surplus stayed on the downward track and missed market expectations. The outlook for the fourth quarter is not optimistic. The US unemployment figure for the week ended October 8th came out at 404,000, signaling the employment pressure is still strong in the country. On Tuesday October 11th, the US Senate did not approve US President Obama’s job creation plan during their vote, which added to investor worries towards the global economy. Metals prices dropped as investors were cautious.

LME aluminum successively dropped below the 5-day and the 10-day moving average overnight to finally close at USD 2,206.5/mt, down USD 38.5/mt or 1.71% from previous trading day. Total positions increased 2,601 lots to 843,634 lots.

China’s September CPI is scheduled to come out today. Most investors expect the figure to stay near 6%, but will not hit a new high. The stabilizing inflation pressure may alleviate market worries. Today is the last trading day for the SHFE current-month contract, spot premiums are expected to be negative RMB 20/mt to positive RMB 30/mt over the contract. Transactions will be moderate.