MI Comment:Aluminium ponders 2530

After a quiet morning session spent hovering around Friday's closing levels aluminium drifted lower on Monday, only to recoup its losses on the back of a zinc/lead rally in the afternoon's dying stages. From 2527 values skidded to lows of 2497 in a muted start to the month, with dollar weakness and another fall in LME stocks not sufficient to counter a weak US ISM figure for September. However, the whole base complex was set alight by news of a fire at Xstrata Zinc's Mt Isa works, with the light metal jumping from 2500 to highs of 2529 in the last hour of trading. The C-3m contango lengthened this time with the New Year's holiday rolling into the period. Beyond there forward rates eased by 1.00/mth, with 3m-Dec 2011 valued at 30.00b (45.00b). On Tuesday morning the euro lost some ground against the dollar and LME stocks were reported only 525t lower with no further warrant cancellations, though prices were nudging up against resistance c. 2530. At time of writing trading had resumed at 2528, slipping to 2513 before peaking at 2530 and pulling back to 2513 currently. In quiet conditions base metals were taking their cue from weaker precious and oil markets. Technical indications remained decisively bearish wrote Cliff Green Consultancy in their latest update, though a clear breach of 2530 could see further corrective moves towards 2580/90. Last at 2512 on only 1,250 electronic lots traded.