MI Comment: No-show of stocks keeps aluminium in suspense

Power outages in southern Africa and news that Chinese electricity subsidies for aluminium smelters would be stopped were supportive of prices on Thursday, though the market failed to improve on the premarket high of 2495 as we went to pres yesterday. Instead, values were pressured by profit-taking in lead and copper as the day wore on, slipping to 2457 in the pm sessions before improving at the close. Locals reported some far-dated options enquiries doing the rounds, purportedly from former fund longs looking to re-invest profits in calls. However, the forward structure betrayed no sign of any significant trades with rates essentially unchanged overall. Two-way movement was mostly confined to $0.50-$1.00/mth, putting the 3m-Dec2011 carry at 30.00c (up from 24.00c), or 2500 outright (2490). Trade remained slow on Friday morning with prices ambling in a 2470-2485 range so far, with a mere 630 lots changing hands via LME Select. While copper had come off $100 after stocks had risen in Shanghai and London, aluminium stayed steady after landings rumoured to be in the order of 100,000t failed to show. Cliff Green Consultancy expected prices to trend 'significantly lower' in the coming weeks, though in the interim a visit to resistance c. 2530 remained a possibility. In the absence of a clear break above 2540 renewed bouts of weakness were anticipated, they concluded. Last at 2480.