Aluminium fails to hurdle 2830

On what was generally a steady day throughout the LME complex, aluminium appeared to struggle on Tuesday. Persistent forward (producer) selling interest hampered buyers looking to ride a new wave of fund allocations that many observers were expecting to hit the market for the start of November. As we went to press yesterday Select had reopened at 2818 and after slipping to 2810, prices had picked up to 2827 in good volume. This trading range held for most of the day, though as 3-months touched 2830 in the afternoon sessions, a bout of (what looked like) liquidation pulled prices down to 2785 before the kerb was out. Values later bottomed at 2780 in the aftermarket, leaving some analysts perplexed and disappointed, after the combination of fresh CTA buying and raised Chinese export levies had lifted expectations of a move towards 2880. Commentators attributed the move to 'news' that "tens of thousands" of tonnes of aluminium had been moved off Chinese producers' books ahead of today's new tax and were about to be exchange-warranted.

Nearby spreads were little-changed, as were the forwards at the end of the day, with only 2007 marginally easier and the rest static.

Trading resumed in Asia on Wednesday morning at 2788 and as in previous sessions, the initial few hours of light trading again saw light buying, moving up to 2800. However, with confidence knocked by yesterday afternoon's sharp dive, the market was struggling and prices fell back to 2777 ahead of the LME stocks report. Inventories rose and instead of a CTA-inspired rally for the start of November, traders were now waiting for this afternoon's US ISM report. Sell orders c. 2790 had capped the rest of the premarket, during which volumes had notched up 2,400 lots. With the market struggling to overcome technical resistance c. 2830, trading strategists Cliff Green Consultancy suggested in a report last night that supports around 2730/40 could come under fresh examination. A breach below there could trigger further falls, though they continued to 'monitor corrections' for an opportunity to establish longs, they added.