Slow, slow, quick-quick, slow, would sum up the action in recent sessions. After some enthusiasm on Monday on positive (US) economic readings that sparked short-covering throughout the commodities sector, the markets fell asleep again on Tuesday. Aluminium had followed copper higher and visited the 30-day moving average with today’s June options expiry plaguing shorts, though after an early high at 2828 interest waned. Nickel and lead set a negative tone as they slid lower on rising stocks and the partial lifting of a force majeure, respectively, while copper eased as its cancelled warrant total fell. A break above 2860 would have really brought aluminium to life with the distant 2900 call options perhaps coming into play, though as the prospect of that happening faded, liquidation set in. Prices slid back to 2790 where the 10- and 100-day MAs provided support, while a jump in the US ISM’s non-manufacturing index sparked a bounce to 2810. In the end however, the market dozed off again and values ended the aftermarket at the lows.
With the big June ‘play’ coming to naught, nearby contangos stretched wider still with the interim carries all linear. Forward backwardations were up to $2.00/mth easier in H2 2008, while movement elsewhere was mixed, leaving the curve little-changed overall. The WC warrant banding report remained clear in this morning’s update.
On Wednesday morning the torpor continued with few directional signals to go on. Aluminium had managed a high of 2803 so far before easing lower to test the 100-day MA once more. At time of writing values had bottomed at 2780.25 (to be exact) and were last traded at 2790, on low volume of 1,000 lots total. Medium/long term trends continued sideways, wrote Cliff Green Consultancy last night, as they looked for a breach above 2860 to break the deadlock, while local support was visible on the charts c. 2740.
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