MI Comment: Aluminium eyeballs $2400

On the heels of Friday's dire US employment data came a set of weak Japanese Q2 GDP figures on Monday morning, adding to the negative tone throughout global markets. Later the IMF revised downward its forecast for global economic growth, hardly improving traders' moods. Of the LME complex zinc fared worst, with stocks building and the prospect of strong Chinese growth in production, while aluminium continued to float just above critical support c. 2400. The light metal continued its own strong rate of inventory build on the LME yesterday, while most of the headlines from a major conference concerned fresh production. However, with so many of the market's 'great and good' swanning around Dubai, an attack on 2400 wasn't forthcoming. Prices drifted from early highs of 2455 to 2420 in the pm sessions, with strong interest in oil and gold cushioning the fall. The nearby contango eased throughout, while forward backwardations eased by $1.00/mth typically. On Tuesday morning copper moved higher after a better-than-expected set of Chinese (copper) import figures, though aluminium struggled after another net 6,000t landed at LME-registered warehouses. Prices had so far stayed in a narrow 2436-2425 range on electronic turnover of 1,250 lots. The significance of support at 2400 was abundantly clear on the weekly chart (above) and with any bounce from here likely to be restricted to "corrective action only", Cliff Green Consultancy looked to probe the short side in days ahead, they wrote.