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SMM Daily Review - 2012/2/2 Base Metals Market

posted Feb 3, 2012, 1:58 AM by BENKAI Co

The most active SHFE aluminum contract for delivery in April opened slightly higher and closed up RMB 25/mt or 0.15% higher at RMB 16,270/mt on Thursday supported by short covering following afternoon gains in the Shanghai Composite Index. Transactions stayed below 10,000 lots as longs and shorts exerted nearly equal influence in the market. The contract is expected to stay near present levels and gather upward momentum to challenge the RMB 16,300/mt mark.

Spot aluminum was traded mainly between RMB 15,920-15,950/mt in Shanghai, with discounts of RMB 90-110/mt over the SHFE current-month aluminum price. In the morning, the SHFE current-month aluminum price dropped continually to RMB 16,000/mt. Entering February, as downstream demand stays weak and discounts hold near RMB 100/mt, most traders prefer arbitrages in the futures and spot markets. Rare participation of both suppliers and buyers in the spot market on the one hand inhibited losses in aluminum prices and led to an extremely light trading volume on the other. Spot quotations were lifted to near RMB 16,000/mt in the afternoon supported by gains in the Shanghai Composite Index. Buying interest of middlemen slightly improved but supply below RMB 15,950/mt was rarely seen. Only a few deals were done at RMB 15,980/mt in the afternoon due to low interest for higher-priced goods.

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