MI Comment: Aluminium curbs its enthusiasm

While lead set fresh record highs and copper ran higher with supply tightness coming home to roost, aluminum traders managed (as ever) to curb their enthusiasm on Monday. Fresh CTA allocations for July and options declarations due on Wednesday heightened interest, though the markets’ real direction came from an imploding dollar and stronger-than-expected global macro readings. The Japanese Tankan index for Q2 showed renewed business optimism, Germany’s PMI and EU manufacturing ran ahead of expectations and later strong US ISM manufacturing and production indices caught traders by surprise. None of this managed to hoick aluminium out of its well-established range, though prices did pick up from an opening low at 2723 to a closing high of 2759.

Nearby spreads looked marginally narrower, though this was due to Cash moving past July 4. Forward movement was limited to 2009 and 2010 where rates tightened by $0.50-$1.00/mth. The latest WC warrant banding report from the LME again contained two holders each with cumulative Warrants/Tom/Cash positions equal to 30-40% of all non-cancelled stock.

Trading resumed on Tuesday at 2755 from where prices had picked up no more than $10, testing the glass ceiling at 2765/70 on turnover via Select of a modest 1,300 lots currently. A decisive breach above there could extend gains closer to the 2835 region, though a ‘clear move’ above 2850 was required to turn trends higher, wrote Cliff Green Consultancy in a report.