SMM Morning Review: LME aluminum should move within USD 1,760-1,790/mt on 27th June

The US Commerce Department announced that the final reading of US 1Q GDP was revised down to 1.8% from the preliminary reading of a 2.4% growth, fuelling worries over growth in the world’s largest economy. Downbeat data, however, also raised doubt over whether the US Federal Reserve will wind down debt-buying program before the end of this year. On the other hand, building permits in the US in May was revised up to -2.0% from -3.1%, suggesting recovery in the country’s housing market and providing support to the scaling back of monetary stimulus. Short-term liquidity crunch in China is weighing on market sentiment. As a result, the US dollar index rose, leaving commodity prices remaining at low levels. LME aluminum hovered near USD 1,778/mt during the European session, with support at USD 1,770/mt but meeting resistance at USD 1,785/mt. Finally, LME aluminum closed down USD 5/mt or 0.28% at USD 1,773/mt. LME aluminum inventories increased 2,725 mt to 5,448,000 mt, but positions decreased 5,702 lots to 753,534 lots.

Aluminum prices will remain low given that markets are staying wary. LME aluminum should stagnate at USD 1,775/mt and move within USD 1,760-1,790/mt on Thursday. The most active SHFE aluminum contract is expected to open lower at RMB 14,250/mt, with prices between RMB 14,200-14,300/mt. In spot market, some traders will remain anxious to sell, but downstream buying interest will dwindle, with spot discount of RMB 0-20/mt and premium of RMB 0-20/mt expected over SHFE 1307 aluminum contract prices.