SMM Morning Review - 2011/9/30 Aluminum Market

German parliament approved the EFSF expansion overnight, boosting investors' optimism over the second bailout fund for Greece. US new unemployment claims dropped below 400,000 unexpectedly to a 5-month low. The country’s 2Q GDP growth was also revised upward. As a result, investor worries towards a global recession weakened, which in turn damped investors’ haven demand in the US dollar, thereby pushing LME aluminum prices to an intraday high of USD 2,250/mt. However, as investors were still cautious about bailout for the European debt crisis, the US dollar index slightly rebounded later, trimming gains in LME aluminum prices. The metal finally closed at USD 2,242/mt, up USD 41/mt or 1.86% from previous trading day. Total positions increased 1,302 lots to 804,988 lots.

SMM expects LME aluminum to test the 5-day moving average and fluctuate between USD 2,220-2,260/mt today as Chinese investors have exited the market due to the National holiday thereby lowering down traded volumes. The most active SHFE 1112 aluminum contract is expected to open higher near RMB 16,500/mt and fluctuate between RMB 16,450-16,650/mt as investors will mainly close their positions during this last trading day before the National Day holiday. The spot aluminum market will be quiet today and spot premiums are expected to stand steady between RMB 180-220/mt. No transaction is expected.