MI Comment: Rising costs cushion aluminium

With oil prices climbing higher and net energy costs in China on the rise too, aluminium held on on Tuesday as others fell. The morning's tone was set by lead after LME stocks jumped 15 per cent, though a stronger yen/dollar cushioned the light metal's fall as it slid from 2507 to 2465 in light turnover. With the 10- and 30-day moving averages converged around 2460 the market turned around from there, despite gloomy comment from the Fed on the US housing sector, recovering all the way to 2505 in the pm sessions. Forward rates continued to seesaw with spreads tightening up again overall. H1 2009 eased by up to $2.00/mth, while H2 returned to a $1.00/mth backwardation. H2 2010 also tightened, by $2.00/mth, while 2011 eased a fraction. 3m-Dec2011 ended Level, in from 5.00c, up $5.00 in outright terms. History repeated itself so far on Wednesday morning with lead stocks jumping another 14.5 per cent and prices crashing lower. Aluminium had accordingly slipped again from 2505 to 2470, lifting to 2480 currently on modest total electronic turnover of some 1,600 lots. Nearby technical resistance remained at recent peaks c. 2530/40, while Cliff Green Consultancy kept support at the one-month lows of 2370/80.