Aluminium sinks as copper dumps

Wednesday, 1st November, was about a loss of confidence across the LME complex, instead of the upside bonanza that new-month fund allocations often bring. The mood was mostly inspired by copper, which had lagged the others in recent days/weeks. After another (LME) stocks rise was followed by significantly worse-than-expected US ISM figures, it was liquidation time.

Aluminium had looked hesitant as we signed off yesterday with producer selling putting a lid on the market above 2800, though hopes for a fresh injection of fund cash remained high. Over the morning sessions prices slid towards 2770 and although some money did arrive as US fund managers opened for business over lunch, the budding rally was extinguished at 2815. The ISM data appeared to nail copper in particular and it sucked the rest lower as it lost $330/t in the pm sessions, at one point.
Aluminium tumbled through the (green) 10-day moving average c. 2750, bottoming at 2720 in the pm kerb. The 'bounce' was half-hearted indeed, recovering no further than 2745 in the aftermarket.

Nearby spreads were mostly unchanged, though Dec27-Jan17 slimmed to 10.00b (16.50b), making the difference. The forward structure also eased, with 2007 narrower by $2.00-$3.00/mth and H2 2008 also easier by the same margin. Beyond there rates were $1.00-$1.50/mth softer in 2009 and 2010.

Trading resumed on Thursday morning at 2748 and in a routine session aluminium had ranged between 2760-2740, on turnover of 1850 lots, dithering around the 10-day MA. Talk of yet another alumina price cut by Chalco and of thousands of tonnes of Chinese primary metal soon registering on the warehousing radar in Asia had dampened enthusiasm for the time being, though locals remained sanguine with plenty of bargain hunting buying reported. Technically, Cliff Green Consultancy too remained a lurking buyer, with support pegged around 2710/30 and again at 2660, with only a 'decisive break' below there damaging the "current positive tone".