MI Comment: Flash in the aluminium pan?

Aluminium was slower out of the starting blocks than some of its LME peers on Wednesday, though in the end the market was unable to resist short-covering rallies everywhere. The US interest rate cut had come too late to be fully digested by traders on Tuesday, though yesterday equities led the way with oil prices also surging. By the time we signed off previously aluminium had made an early high at 2446 as trading got underway in London, though unlike some of the others, prices hesitated and flatlined throughout the morning sessions. The earlier break below 2400 had signalled lower prices on the charts, with Cliff Green Consultancy expecting prices to head towards 2200 in the coming weeks, though as 3-months broke back up through 2450 buy-stops were triggered. The ensuing run-up took prices all the way to a pm peak of 2515 before pulling back to the 2480s in the aftermarket. The surge in outright prices saw forward rates tighten, as opportunistic producers reached for the 'sell' button, with H2 2009 tipping into narrow backwardation once more. 2010 tightened by $1.50-$2.50/mth with farther months putting on slightly less. On Thursday morning the dollar was in deeper decline across the board, though concerns about the state of the US economy generally cast gloom and kept markets subdued. US housing construction had slowed to 12-year lows amid yesterday's action, while the latest WBMS surplus estimate helped to keep aluminium in check specifically. At time of writing the light metal had reopened on Select at 2480, dipped to 2461 and was currently on the highs at 2483, though volumes stood at a lowly 1,500 lots. Having passed through their stop levels c. 2500, CGC had now covered shorts. However, with underlying technical studies remaining "clearly bearish", the trading strategists would look to re-establish them "at slightly higher levels" in the days ahead, they wrote.