MI Comment: Aluminium holds lower levels, nearbys bid again

Given continuing talk of China crashing and global markets in possible meltdown, the base metals complex didn't fare too badly on Wednesday though they did extend their losses. Yesterday's gloom centred on a sharp revision downwards of US GDP for the last quarter and a poor set of new home sales and Chicago PMI data. Aluminium et al had already pulled lower before we signed off at the end of the premarket slipping from 2853 to 2820, though later prices bottomed at 2808 after the US macro news. Liquidity across the complex was on the low side as dealers stood aside, waiting to see if the stock market falls were merely corrective or a precursor to an apocalyptic collapse. Direction came in the end from the precious metals, picking up in unison after Fed chief Bernanke's soothing comments on the US economy. The light metal mustered a pm kerb rally back up to 2846 briefly, though in the last ten minutes of trading it faltered again.

Suggesting that 'the game' was back on, locals reported strong interest in outright Cash, with the featured buyer also bidding nearby rates aggressively. As a result, C-Mar(21) ended at a linear 31.00b (23.00b), with Mar21-29 out to 8.00b (3.00b). Beyond there rates were easier with Apr2-18 valued at 4.00c (1.60b) and Apr-3m in to 7.00b (11.00b). The WC dominant long stayed at 80-90% in the LME's latest update.

Having tightened significantly in the 3-month rally to 2900, forwards were cut again yesterday with 2007 in by up to $4.00/mth, 2008 by $2.00-$2.50/mth and 2009 by $2.50-$4.00/mth.

On Thursday morning so far the dark clouds appeared to be lifting with the advent of March. Reams of comment in the world's financial press held a general consensus that recent falls in financial markets were a blip, while the exchange that had set it all off in Shanghai had begun a recovery. After pulling lower to 2805 initially, aluminium steadied and followed nickel and copper higher, lifting to a high of 2850 currently, on moderate turnover of 1,800 lots. Cliff Green Consultancy's short-to-medium term outlook had been undisturbed by the fall, with the trading strategists continuing to look for prices to climb towards 3050, after tackling expected resistance in the 2930 zone.