MI Comment:Aluminium at 2007 lows, heading (much) lower?

As we signed off Tuesday aluminium was tentatively exploring territory above 2600, though as metals and other markets later fell on further possible woes in the managed funds industry, the light metal slid lower over the course of the day. As we went to press prices had nudged a high of 2607, though from that point on they skidded all the way to 2552 at the closing bell as trade buyers backed off. Apart from influences elsewhere, aluminium specifically was weighed down by reports of rising production in the US and at DUBAL, locals noted. Nearby contangos stayed at close to full tilt, while forward backwardations were generally $1.00/mth easier, though 2009 saw H1 fall by up to $4.50/mth and H2 gain up to $3.00/mth. The hangover after too many years of cheap credit lingered on into Wednesday morning, with Asian markets following through from New York’s losses yesterday, which in turn sent European markets off again when trading resumed here. Among the metals only tin was holding on as we went to press, while aluminium was under serious pressure after slipping beneath immediate technical support c. 2540/50. At 2528 3-month aluminium had plumbed fresh lows for 2007, while Cliff Green Consultancy had recently warned that a decisive breach below 2540 signalled falls towards 2400 (repeat 2400). Volumes via Select were running at a very high 5,000+ lots, suggesting that trade buyers were mopping up, though as we signed off no rebound was (yet) forthcoming. Last at 2530.