MI Comment: Aluminium still suffering peer pressure

As we signed off Wednesday aluminium had slid from opening levels of 2672 to 2635, weighed down by selling elsewhere after copper and nickel stocks had risen strongly on the LME. It turned out to be the range for the day with prices making almost a full recovery in the pm sessions, regaining 2662 in the afternoon. It was a routine, summer’s day of trading with little news to go on. Equities and precious metals were steadier, though among the base metals only zinc posted a (modest) gain. Nearby spreads were fractionally easier from Oct-3m, the contango in Q1 2008 grew by up to $3.00/mth, while elsewhere forward backwardations slipped by $0.50/mth typically. The LME’s warrant banding listings were empty. On Thursday morning prices were under attack with lead seeing aggressive long-liquidation, while copper and nickel were down after stocks rose again. In the background the US subprime mortgage saga rumbled on as more asset-backed funds were frozen. Aluminium had picked up to 2666 initially, though with the others it had tumbled to 2620 at time of writing, on high turnover of more than 4,000 lots via LME Select. Underlying consumer buying had arrested the slide there so far, with technical support put by Cliff Green Consultancy at 2610/20 also stimulating interest. In their latest daily report last night the trading strategists expected these levels to be re-tested, with a breach below indicating further falls towards 2550. Last at 2630.