MI Comment: False alarm, as aluminium slips back

As aluminium is wont to do from time to time, it promised upward progress on Monday morning only to falter as the day progressed. By the time we signed off yesterday the light metal had picked up in an unusually active Asian session, lifting from 2808 to a premarket high of 2834. Despite copper breaching the psychological barrier of $8000 -- against the expectation of the majority of market pundits – aluminium progressed no further, restrained as ever by heavy layers of producer selling. The likes of technicians Cliff Green Consultancy had looked for a break above 2840 to set off a further rally, though it wasn’t to be this time with prices sliding back to end unchanged at 2812 at the closing bell. The market bottomed at 2803 in late trading. Nearby contangos finished fractionally wider with the second half of C-3m $0.02-$0.04/day easier. Forward backwardations slipped back by $0.50/mth to the end of 2010. Two parties remained in the 30-40% bracket of the LME’s WC warrant banding report. So far on Tuesday morning the proceedings had been dull, with aluminium traded in a $10-range between 2800-2810, on turnover via Select of only 700 lots. Failure to tackle and overcome resistance c. 2830/40 now left the market prone to renewed bouts of weakness, wrote CGC, as they looked to probe the short side ahead of a test of support c. 2740. Last at 2808.