SMM Morning Review - 2011/11/22 Aluminum Market

The European debt crisis has shown signs of spreading to France and Germany. Meanwhile, the US super committee said they failed to reach a deficit-cutting agreement for at least USD 1.2 trillion. Though major credit rating agencies said this will not affect their ratings for the US, investor worries towards U.S. debt nevertheless brought a new blow for global markets. A selling wave extended across commodity and stock markets as investors sought asset protection and the U.S. dollar index consolidated at 78 as a result.

LME hit a new yearly low of USD 2,055/mt overnight, and closed at USD 2,074.5/mt, down USD 55.5/mt or 2.61%. Total positions increased 9,013 lots to 929,908 lots. The latest LME aluminum stock decreased 2,950/mt to 4,557,325 mt.

SMM expects LME aluminum to fluctuate between USD 2,050-2,090/mt and the most active SHFE aluminum contract between RMB 15,700-15,950/mt today. China spot aluminum prices may hit a new yearly low due to losses in the SHFE current-month aluminum contract. Spot discounts over the contract are expected to narrow due to low selling interest. SMM expects spot aluminum to be traded at premiums between negative and positive RMB 20/mt over the SHFE current-month aluminum price during today’s trading. Downstream buyers will mainly stand on the sidelines. The traded volume will be quite limited.