MI Comment: Rising production data douse aluminium's run

Thursday was a day for reflection across markets generally, with most of the base metals complex easing off from Wednesday's highs and consolidating at somewhat lower levels. Aluminium took a look at the 2500 level once more after we signed off during a calm premarket, peaking at 2494 ahead of the morning rings. However, while copper held on, on the back of supportive Latin American stoppage news, the light metal fell back over the rest of the day. By lunchtime prices had slid to 2446 upon which they bounced to 2475, though towards the end of the afternoon they eased again, to lows of 2440. Locals suggested that a reported strong rise in Chinese production coupled with slacker US demand had 'frightened' speculators. Having tightened due to outright selling as 3-month prices surged to 2515 the previous day, on Thursday forward rates eased once more, by $1.00-$2.00/mth throughout. Shortly after the resumption of trading on Friday morning prices nudged up to 2458, though with the focus remaining on increased production and rising (exchange) stocks, they had eased further to 2419 in London's premarket. However, it wasn't all one-way traffic with turnover via Select exceeding 3,000 lots at the end of the session, on top of the large tonnages that tend to change hands outside the system. Underlying technical trends remained 'clearly bearish' according to Cliff Green Consultancy, though with support c. 2375 having contained downward moves, fresh corrective strength towards 2500/20 was yet to be expected, they wrote. The trading strategists looked to re-establish shorts at higher levels in the days ahead, they concluded. Last at 2435.