Volumes were rather skimpy as we signed off on Thursday morning, though as the day progressed aluminium received an injection of fresh interest courtesy of a rally in the copper market next door. From 2706 values had edged higher to 2722 in the premarket, after which they wilted again, though strike news and earthquake reports from Chile fired up the red metal and heightened the developing nearby squeeze. Speculative buying dragged the rest of the complex higher in sympathy and although aluminium did spike fleetingly to 2749, considerable producer selling c. 2740 stemmed the run.
The C-3m contango appeared narrower after the weekend rolled past Cash, though rates were basically unchanged. Ample liquidity in aluminium's forwards meant that outright sellers beyond 3-months only nudged backwardations wider by $0.50/mth to end 2008 and by up to $1.00/mth in 2009. In this morning's update from the LME, two parties now found themselves in the 30-40% bracket of the LME's WC warrant banding report.
A hesitant start to trading on Friday morning saw prices slip back to 2723 initially, though a slide in exchange stocks of copper brought renewed strength, while aluminium's challenge of overhead moving averages attracted attention too. The combination of the month/quarter/half year's end added extra interest and the light metal had traded up towards nearby resistance put by Cliff Green Consultancy c. 2760/70. On good turnover of 2,500 lots via Select prices had so far topped 2760 and were last trading c. the 30-day MA. A sustained move above 2770 would trigger 'more serious' advances closer to 2835, the trading strategists wrote last night, though with the market remaining broadly range-bound failure there would stimulate fresh weakness, they added.
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