MI Comment: Aluminium steadies as others slip

Aluminium was the LME's only (small) gainer on Wednesday after coming under pressure initially from stocks-induced falls in lead and copper. As we signed off yesterday the light metal had slipped from 2505 to 2470, which turned out to be the low of the day. Locals had suggested for some time that that aluminium had been used by hedge fund managers as a (short) hedge against longs elsewhere, partly explaining the market's counter movement. More house building gloom from the US and comments from the IMF that the dollar remained relatively 'overvalued' saw the greenback weaken against the euro, nudging prices to a high of 2520 after the kerb close. Forward rates tightened by $0.50/mth in 2009 and by $1.50/mth in 2011, valuing 3m-Dec 2011 at 20.00b (Level), 2490 outright. On Thursday morning copper was pressured by a hefty stocks landing, while aluminium again did its own thing. Trading resumed in Asia c. 2505 and had lifted steadily towards 2530 currently, on moderate turnover via Select of 1,700 lots. Cliff Green Consultancy in their latest daily report saw the market 'deteriorating', though another test of recent peaks at 2535/40 remained likely, they said. However, a decisive break above here was required to avoid renewed bouts of weakness, they added. Last at 2525.