SMM Morning Review – 2011/7/15 Aluminum Market

On July 14, while the US announced better-than-expected data that June retail sales increased by 0.1% MoM, core PPI rose by 0.3% MoM and unemployment claims fell to 405,000 during the week from July 4 to July 9, investor risk appetite still fell due to ongoing European and US debt issues. Later during the day, after US FED chairman Bernanke’s remarks that QE3 was not impossible though more bonds-buying would not be considered for the short term, the US dollar index rose and tested the 5-day moving average after standing steady at 75. The US dollar index finally closed at 75.121, up 0.56%.

As US dollar index fluctuated upward, LME aluminum prices erased earlier gains overnight, and finally closed at USD 2,506/mt, down USD 10.3/mt or 0.41% due to strong resistance at the 10-day and 20-day moving averages. Total positions decreased by 2,496 lots to 695,339 lots.

SMM expects LME aluminum prices to fluctuate between USD 2,480-2,530/mt on July 15. Most active SHFE 1109 aluminum contract prices are expected to rise slightly after opening lower and fluctuate between RMB 17,350-17,450/mt. Since July 15 is the last trading day of SHFE current month aluminum contracts, spot aluminum premiums are expected to narrow to between positive RMB 10-50/mt over SHFE current-month aluminum contract prices. Wait-and-see attitude will be strong among both sellers and buyers.