SMM Morning Review: LME aluminum should move with in USD 1,820-1,850/mt on16th May

Q1 GDP in France, Spain and Italy contracted. Germany’s GDP pointed to slight growth in the first quarter, but still missed forecasts. As a result, Q1 GDP in the euro zone declined 0.2%, contracting for a sixth straight quarter. The US dollar index surged above 84 on weak European economic data. It was later announced that the US industrial production fell sharply in April and New York Fed manufacturing unexpectedly pointed to contraction in May. These discouraging figures dampened market sentiment, but also raise expectations that the US Fed will not scale back asset buying for the time being, forcing the US dollar index to give back gains. LME aluminum was capped under USD 1,850/mt during European trading session, with the low-end price at USD 1,821/mt. LME aluminum recovered most of its losses at the tail of trading on dip-buying by longs, and finally ended the day down 0.54% at USD 1,845.5/mt. Latest LME aluminum inventories decreased 4,325 mt to 5,225,975 mt. The light metal will remain in negative territory on downbeat economic indicators. LME aluminum should meet resistance at USD 1,850/mt and fluctuate in the band of USD 1,820-1,850/mt on Thursday. SHFE 1308 aluminum contract is expected to open lower at RMB 14,500/mt, with prices between RMB 14,450-14,550/mt. In spot market, SHFE 1306 aluminum contracts have become the new current-month contract today. Overall trading should be light, with spot discount expected at RMB 10-50/mt over SHFE 1306 aluminum contracts.