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SMM Morning Review – 2011/12/20 Aluminum Market

Author:Site  Source:Network  Click to rate:2514  Post time:2011-12-20

    SHANGHAI, Dec. 20 (SMM) – Worries towards the euro zone debt crisis led to a struggle of the euro at 1.3 US dollar and in contrast helped the US dollar index consolidate above 80. As Christmas nears, more investors chose to close their positions on risk concerns.

    Due to weak consumption, the LME aluminum stock surged further by 50,300 mt overnight, pushing the total LME aluminum stock to 4.87 million mt, a record high. The many positions opened by shorts caused a 1.55% loss for LME aluminum, which ended the trading day at USD 1,973/mt.

    Depressing fundamentals are expected hit hard on the aluminum market, with shorts taking up the larger part. As such, SMM expects LME aluminum to fluctuate between USD 1,950-2,000/mt and SHFE aluminum for three-month delivery between RMB 15,600-15,725/mt. The SHFE current-month aluminum price is expected to face stronger pressure at RMB 15,900/mt and spot aluminum is expected to track possible losses in the contract. Goods holders’ selling interest will turn stronger as spot prices slip, with spot discount over the SHFE current-month aluminum contract expanding to RMB 30/mt. The buying interest will be quite low, however, as bearishness prevailed. Market deals therefore will be quite limited.


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