After a sharp bounce on Friday the LME complex stalled on Monday on a lack of fresh news and without any macroeconomic data to provide fresh direction. May’s third Wednesday pricing brought no excitement and ahead of Chinese import data that were expected to show slowing demand for copper in particular, liquidation was again the order of the day. Aluminium had already slipped from an early high of 2876 to 2840 in the premarket before we signed off and later as fund selling sucked copper lower, the light metal slumped to 2819.
Gyrations in nearby spreads towards the end of last week attested to nervousness over options open interest, though nerves settled again on Monday. The C-3m contango eased again, with C-Jun20 at a linear $0.60c per day, Jun-Jul at $0.14c per day and Jul-Aug at $0.15 per day. Forward backwardations narrowed by $1.00-$1.50/mth to the end of 2010 and both ‘dominant’ longs in the LME’s WC warrant banding report were back in the 30-40% bracket.
After a slow start that saw aluminium bottom again at 2819 on Tuesday morning interest picked up significantly, though prices had recovered no further than 2838 so far on premarket turnover of a healthy 2,100 lots. The preliminary snapshot of Chinese import data for April showed copper imports running at much better levels than expected and prices were responding accordingly. Aluminium, however, remained at the lower end of its recent range. A breach of technical support c. 2790 could trigger falls towards 2720, wrote Cliff Green Consultancy in a report. Like many others, the trading strategists were on the sidelines with prices stuck in a broad sideways pattern.
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