MI Comment: Aluminium holds at lower levels

By the time we signed off on Friday aluminium had seen a high level of trading volume as prices tumbled from 2760 to 2712 before recovering to 2740. This turned out to be the trading range for the day, though prices ended close to the highs with some 1,000 lots changing hands in hectic dealing up to the pm kerb bell. The hold above important technical support at 2710 sparked speculative buying interest, while consumers also bought at lower levels, buoyed by better than expected US GDP data and by power problems at Nalco and fresh measures to restrain Chinese production. Nearby spreads were unchanged, forward rates firmed by $0.50-$1.50/mth up to 2010 and then weakened by a similar margin beyond there. The LME’s WC warrant banding report remained clear. At time of writing on Monday morning the market was extremely quiet with only 550 lots having traded via Select and with prices hemmed in a narrow 2759-2746 range. The passing of a weekend appeared to have cooled immediate fears of further fallout with commodities holding steady, despite continuing pressure in the equities markets. Cliff Green Consultancy as at Friday’s close put nearby overhead resistance c. 2785, while support was kept at 2710; a sustained break below there would signal deeper falls. Last at 2746.