MI Comment: Aluminium surges after support holds again

As we signed off on Tuesday aluminium was seeing a buy spurt towards the end of the premarket, with the previous day's hold in the 2370s (again) sparking short-covering. Buyers were described by locals variously as 'consumers', 'macroeconomic fund managers' and 'CTAs', suggesting either strong interest across the board or that none had a clue who/what was really behind the move. LME stock increases and rising global production were set aside as the market rallied from 2415 to 2455 ahead of the am sessions. From there things eased after more dire news from the US in the shape of falling consumer confidence and a drop in existing home sales. However, with the bit between its teeth the light metal then powered from 2440 towards the 30-day moving average at 2480 before the pm kerb was out. As was to be expected, higher prices drew outright forward selling interest and rates throughout were better bid. 2008 and 2009 remained in (narrower) contango, though the carry of the moment, 3m-Dec2011, was now rated at $6.00b (31.00c) at evaluation time. All was quiet on Wednesday morning with aluminium registering a 2458-2484 trading range, though on only a slim Select turnover of 1,100 lots. The bulk of yesterday's early buying interest had uncharacteristically come through the LME's electronic trading platform. Copper meanwhile oscillated around $8000 during the premarket, with both contracts drawing support from firmer oil and gold prices, locals observed. Another net landing of 7,600t and the presence of the 30-day MA (at 2479) provided some resistance, while Cliff Green Consultancy kept theirs around 2500/20, then 2580/90, wrote the trading strategists in a report. They remained lurking (short) sellers, with underlying technical studies still 'clearly bearish', they concluded. Last at 2476.