SMM Morning Review: LME aluminum should move within USD 1,850-1,870/mt on 30th May

The Organization for Economic Co-operation and Development (OECD) on Wednesday trimmed its growth estimate for the world economy, saying global GDP will expand 3.1% in 2013, instead of 3.4% estimated earlier. It also lowered the US growth outlook for 2013 to 1.9% from 2% and cut its forecast for China’s GDP growth from 8.5% to 7.8%. The organization projects that the euro zone will slip into recession for a second straight year. The IMF anticipates a 7.75% growth for Chinese economy, down from the earlier forecast of 8%, dampening market sentiment. The US dollar index surrendered gains recorded in the previous trading day, but did little to help lift base metals. LME aluminum broke through the 20-day moving average on dip-buying by shorts before finally closing 0.78% higher at USD 1,865.5/mt, the best performer among base metals. Latest LME aluminum inventories decreased 9,900 mt to 5,203,150 mt.

Worries over global economic growth will keep a lid on the light metal. LME aluminum should test support at USD 1,850/mt and move within USD 1,850-1,870/mt on Thursday. SHFE 1308 aluminum contract is expected to open at RMB 14,650/mt, with prices between RMB 14,600-14,660/mt. In spot market, trading will be light as the month comes to an end. Spot discount of RMB 20-60/mt is expected over SHFE 1306 aluminum contract prices.