MI Comment: Aluminium steps higher as America parties

As we signed off our previous report on Tuesday aluminium was once more having a look at technical resistance c. 2765, though it was in our absence on Wednesday that prices broke through. Patchy volumes were to be expected with the US on holiday for Independence Day, though the breakdown of the LME Select trading platform didn't help for a large part of the premarket. From an early low of 2742 the market followed copper higher, with a clearance of 2770 coming at the end of the morning sessions. Over the rest of the afternoon values climbed higher to peak at 2785 at the pm kerb close. Nearby spreads remained static, while forward rates gained $0.50-$1.00/mth throughout on the customary producer selling into a rising market. There was no change in the LME's WC warrant banding report, with two holders each with cumulative Warrants/Tom/Cash positions equal to 30-40% of all non-cancelled stock. In thin overnight (Wed/Thu) trading Select registered a handful of trades c. 2780, though as soon as London restarted prices lifted as high as 2792, trying the 100-day moving average located at 2789. Volumes were minimal given the move, with only 900 lots having changed hands electronically at time of writing (though much of aluminium's actual turnover is crossed invisibly in a couple of brokers' dealing rooms). From there prices had pulled back to 2777 currently with copper also slipping somewhat on profit-taking ahead of the resumption of trading in New York. While medium term trends remained flat with prices firmly trapped a broad trading range of the past 12 months, shorter term trends had turned up, wrote Cliff Green Consultancy in a report last night. A test of the 2830/40 area was now likely, they suggested, while immediate pullbacks were now expected to find support c. 2740.