MI Comment: Aluminium hurdles resistance

After a series of lacklustre sessions spent mostly below 2800, aluminium improved on Thursday, stimulated by strong Chinese economic growth and an expectation that exports from there will slow. As we signed off yesterday prices had picked up from lows of 2788 to 2812, though more significant was a jump in turnover with premarket volumes four times that of the previous day’s. With values not (yet) having broken above ‘pivotal’ resistance c. 2840, the market’s ascent was steady over the rest of the day, climbing to a aftermarket high of 2839. The rest of the LME complex also moved higher as copper surmounted $8000, while other commodities and equities indices had an equally good day. Nearby contangos were marginally easier, masked by this weekend rolling past Cash, while forward backwardations were steadier on higher 3-month prices, gaining $0.50-$1.00/mth throughout. The LME’s WC warrant banding report remained clear of holdings. Not unexpectedly China raised interest rates on Friday morning, though this failed to dampen the LME complex at time of writing. Warehouse stock movements reported in Shanghai and in London had been routine but the strong close Thursday had set the light metal up for a go at immediate resistance. After dipping back to 2828 overnight (Thu/Fri) the market picked up sharply as London restarted, climbing to a high so far of 2865 with volumes via Select at a healthy 2,800 lots. A decisive breach above 2845 could extend gains towards 2900 and ‘even’ the 2940 area, Cliff Green Consultancy had written as at last night. As we signed off, the market was hesitating, pulling back to 2850 currently.