SMM Morning Review - 2011/9/15 Aluminum Market

After credit rating agency Moody’s downgraded two large French banks on September 14th, market worries towards the European debt crisis further grew. This was followed by EU Committee President Barroso’s remarks to speed up introduction of euro zone bonds in a bid to comfort investors. Meanwhile, relatively weak industrial production data in the euro zone and US CPI and retail sales data also made it hard for market confidence to improve. As a result, the US dollar index closed 0.27% lower at 76.852. LME base metals, however, generally closed lower despite the weakening US dollar.

LME aluminum continued its fluctuation within a narrow-range overnight, and showed more stability compared with other base metals with a slight USD 8/mt or 0.34% loss being reported before closing at USD 2,362/mt. The metal hit an intraday low of USD 2,345/mt during the day. Transactions of the metal also saw a huge decrease of 3,675 lots to 8,426 lots, while positions increased 5,799 lots.

SMM expects LME aluminum to test the 5-day moving average and fluctuate between USD 2,340-2,380/mt. Most active SHFE 1111 aluminum contract is expected to open at above RMB 17,300/mt and fluctuate between RMB 17,200-17,400/mt. Spot aluminum price is expected to struggle at RMB 17,700mt, with discounts of RMB 30/mt to premiums of RMB 20/mt over SHFE 1109, the current-month aluminum contract.