MI Comment: Aluminium struggles to build on gains

From the get-go on Monday aluminium values were on the slide, with the whole metals complex easing lower after Friday's short-covering buying spree. LME stocks fell and some healthy clips of warrants were cancelled, though this failed to prevent prices from flagging, coming off from 2855 to 2824 before we signed off. The premarket move signalled the range for the day, with the market pulling back to 2823 again in the pm sessions after a bounce to 2844, weighed upon by sliding copper after an end to strike action in Canada. The C-3m period acquired 4 days within Oct-3m and linear contangos stretched fractionally. Beyond there, Apr'08-Apr'09 fell from 114.50b to 93.00b, while the rest of the forwards were essentially unchanged. One 'dominant' holder reappeared in the lowest 30-40% band of the LME's WC warrant banding report, as at cob Friday. On Tuesday morning activity remained rather languid with prices slipping to 2819 initially, before picking up to 2842 currently, though on only 1,250 lots of turnover via Select. Copper had come off further overnight after a partial settlement with subcontractors at Codelco in Chile, though the red metal too was off the lows as we signed off. A test of resistances at 2900, then 2950 was yet on the cards, wrote Cliff Green Consultancy in their latest daily update, though unless the upper boundary was breached, renewed bouts of weakness were likely. First support was pegged c. 2760/70, with an evening close below there bringing 'more serious' downward pressure, they warned. Last at 2840.