SMM Aluminum Market Daily Review (2013-4-11)

SHANGHAI, Apr. 12 (SMM) – SHFE 1306 aluminum contract opened slightly lower at RMB 14,655/mt on Thursday. The most active aluminum contract jumped to RMB 14,790/mt in early morning session, but later erased gains as longs liquidated positions at highs. Finally, SHFE aluminum for June delivery finished at RMB 14,740/mt, up RMB 65/mt or 0.44%. Positions contracted 3,486 lots to 83,164 lots. It is speculated that measures will be introduced to tackle existing excess capacity, forcing shorts to exit the market and helping SHFE aluminum buck the trend by rising among base metals. Nevertheless, gains were constrained by weak fundamentals. The most-traded SHFE aluminum contract is expected to test support at RMB 14,700/mt in the short term.

Spot aluminum was traded at RMB 14,580-14,610/mt in Shanghai on Thursday, a discount of RMB 60-90/mt over SHFE 1304 aluminum contract prices. Low-iron aluminum was trade around RMB 14,750/mt. SHFE 1306 aluminum contract bucked the trend by rising on news that China will invest RMB 7 trillion in infrastructure and step up application of aluminum, pushing spot aluminum up as well. Nevertheless, little possibility of immediate recovery in consumption curbed gains of spot aluminum, with mainstream traded prices failing to rise to RMB 14,600/mt. Downstream producers took a wait-and-see stance, forcing traders to sell at discount, with thin trading reported. In the afternoon, the most active SHFE aluminum contract surrendered gains. Some traders in spot market remained anxious to sell by lowering offers to RMB 14,570-14,580/mt, but inquiries were rarely heard. 

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