Monday’s premarket was a sluggish one across the LME complex, though things livened up later with the loss of downward momentum at the end of May triggering short-covering for the start of June. Having spent the first few hours stuck in a $10-range either side of 2785 aluminium took off in the pm sessions in a commodities-wide splurge that saw the precious and energy complexes rally too. The copper market again recorded not only a strong LME stocks draw but also fresh warrant cancellations, while labour unrest in Latin America was giving the market’s bearish majority something to think about. The light metal had derived support from the 100-day moving average and with June options declaration time almost upon us, dealers were forced buyers in search of delta as the 2900-strike series came into (distant) view. The market romped higher in the closing stages, air-kissing the 30-day MA at 2830 just ahead of the final bell. Prices pulled back to 2815 in the aftermarket.
The outright move had zero effect on nearby rates, with C-3m contangos all stretching incrementally, while forward backwardations were unchanged-$0.50/mth steadier typically. Only H2 2008 moved by $1.00-$1.50/mth. As at cob Friday (the report is two days delayed) the LME’s WC warrant banding report remained clear of dominant holdings.
Having jolted awake late on Monday, on Tuesday it looked like the market had dozed off again after prices touched an early high at 2828. At time of writing aluminium had fallen back to 2805 on turnover of only 880 lots, despite renewed dollar weakness. Cliff Green Consultancy in their latest daily missive suggested that while medium to longer term trends continue to meander sideways, shorter term trends were improving. However, a break above local resistance at 2860 was required to trigger a return to the ‘more important 2910/30 zone’, they concluded. Last at 2809.
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