SMM Morning Review - 2011/9/5 Aluminum Market

The non-farm payrolls data released by the US Department of Labor on September 2nd was much out of market expectation, with zero-increase being reported. As US unemployment rate stayed high at 9.1%, market worries towards US economic recession again caused panic in financial markets, with US stocks and commodities prices plunging and US dollar as well as gold surging. The US dollar index closed 0.26% higher at 74.702 during the day.

After fluctuating at the 5-day moving average, LME aluminum prices hit an intraday-low of USD 2,420/mt on September 2nd following release of panic-generating US employment data. However, the metal reported better losses compared with other base metals due to active buying at lower prices by the longs, with total positions drastically increasing by about 15,000 lots. The metal finally closed at USD 2,442/mt, down USD 8/mt or 0.33% from previous trading day.

US financial markets are closed today due to Labor Day of the country. LME aluminum transactions are expected to remain sluggish with prices fluctuating between USD 2,420-2,460/mt. Most active SHFE 1111 aluminum contract is expected to open near RMB 17,400/mt and fluctuate between RMB 17,350-17,450/mt. Spot premiums are expected to be RMB 40-90/mt over SHFE current-month aluminum prices as continued weak consumption and sufficient supply will likely keep spot aluminum prices at RMB 17,800/mt.