SMM Morning Review – 2011/8/15 Aluminum Market

The US Department of Commerce announced on August 12th Friday that July retail sales rose by a most 0.5% since April from previous month, which met market expectations. Later US University of Michigan released an August Consumer Confidence Index of 54.9, which was much lower than the expected 63 and created a new low since May 1980. As a result, investor confidence fluctuated with mixed economic data, and the US dollar index closed lower at 74.558, down 0.14%. However, most base metals prices fell overnight despite a weakening US dollar.

LME aluminum prices continued to fluctuate on August 12th, and later erased gains during European trading hours to fluctuate at USD 2,400/mt. Finally closed price was USD 2,407/mt, down USD 12.3/mt or 0.51%. Total positions rose by 4,225 lots to 752,027 lots.

SMM expects LME aluminum prices to struggle at the 5-day moving average and fluctuate between USD 2,400-2,450/mt on August 15th. Most active SHFE 1110 aluminum contract price is expected to open lower at RMB 17,500/mt fluctuate between RMB 17,400-17,700/mt. SHFE 1111 aluminum contract is expected to become the most active one if transactions rise as expected. Spot premiums are expected to be RMB 0-80/mt on the last trading day of SHFE current-month aluminum contracts. Consumers are expected to pick up a wait-and-see attitude before most active SHFE aluminum contract changes.