Monday was a generally lacklustre day for aluminium and others in the LME complex, with prices lifting initially on continued strength in precious metals, equities and other markets, only to slide back in the pm sessions. Volumes were on the low side and while supply worries in the copper market and ‘third Wednesday' pricing in the morning rings nudged prices from 2830 to 2856, overhead producer selling inspired profit-taking in the afternoon. Values fell to pm lows of 2815, though late news of a lightning strike at Alcoa's Tennessee operations jolted them back up to 2843 in late trading.
The nearby contango to June remained linear and eased to 34.25c (31.00c), while the fractional backwardation in the tail end of the C-3m period disappeared. Forward backwardations were $3.00/mth easier in Q4 2007 and slipped by $0.50/mth in places up to 2010, while tightening by $1.00/mth in 2011. The LME's WC warrant banding report as at cob Friday (13th) contained two parties, each with holdings equal to 30-40% of total non-cancelled warehouse stocks.
On Tuesday morning trading remained rather subdued and with the partial outage at Alcoa offset by a reported ramp-up in production at Trimet in Germany, prices slid back again in the premarket. At time of writing the market had fallen from 2839 to 2807, on turnover totalling only 1,200 lots. A “clear and sustained” break below 2810 would put values under further downward pressure, wrote Cliff Green Consultancy in a daily report, with a test of the 2720 zone readable. Last at 2820.
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