MI Comment:Aluminium pulled towards 12-month lows

As we signed off Wednesday aluminium had slipped from 2470 to 2447 and recovered fully to 2473, falling on another sizeable LME stocks landing and bouncing on the back of copper. Peruvian strike news and a surprise drop in stocks helped the red metal and the rest of the base complex initially, though everything turned south in the afternoon. Further economic gloom was cast by a brace of early US employment readings ahead of Friday's non-farm payroll data, by continuing woes in the housing market and dispiriting automotive sales figures. News of a closure by a major Anglo/US commodities fund didn't help lift the mood.

In the end, aluminium's losses were negligible after twice dipping to lows of 2435, with persistent strong outright buying interest for December 2011 preventing a deeper slide.

The forward contango in H1 2008 lengthened some more, while the backwardation in 2009 lost $1.00-$2.00/mth. However, the slide in 2010 and 2011 finally halted with the former recovering by up to $2.00/mth and the latter only fractionally weaker. The 30-40% 'dominant' long in the LME's WC warrant banding report was now gone, according to the Exchange's latest update.

Aluminium mustered a very short-lived overnight high of 2455 in the early hours of Thursday morning, though as the premarket got going proper prices fell back to the low 2430's. While copper was holding steady on continuing supply threats, the light metal recorded yet another considerable stocks increase and slid to 12-month lows. The bottom end of the market's 15-month broad sideways pattern was at 2400, wrote Cliff Green Consultancy, with a clear and sustained break beneath there indicating moves towards 2200, they said. Last at 2435.