MI Comment: Aluminium tests support as dollar strengthens

By the time we signed off Monday aluminium had slid from 2439 to lows of 2390, pulling lower with the rest of the metals complex against the backdrop of a stronger dollar. Copper had come under pressure after Chinese traders baulked at higher prices on their return from Golden Week, while the start of LME Week meant reduced liquidity. The twin lows of last month c. 2370 looked likely to come under examination and in the morning sessions the market bottomed at 2376, before flatlining at higher levels for the rest of the day. Nearby contangos remained linear with Dec-3m lengthening by 4 days, while forward rates were only little-changed overall. Dec 2011 outright consequently also fell on evaluation from 2525 to 2480, with a contango of 93.00c (95.00c). A 'fat finger' trade on LME Select up at 2419 distorted the chart somewhat on Tuesday morning, while the real range so far had been 2380-2405, in ultra light turnover. A clear break beneath 2370 would set prices on course towards 2325 and eventually c. 2220, wrote Cliff Green Consultancy in their latest daily report, while initial resistance was now anticipated c. 2440. Last at 2395, 1,050 lots traded.