Wednesday was a topsy-turvy day for aluminium, opening weak after a liquidation sell-off the preceding afternoon, then bouncing towards Tuesday’s high, only to come off again and resurge in the closing stages. From 2670 prices had lifted as far as 2720 before we signed off yesterday, though while volumes were reasonably healthy, many traders stayed on the sidelines ahead of US housing data. House-building starts were good in September, though the level of new permits disappointed, giving the markets mixed signals. In the end it was the weaker dollar and rally to fresh highs for the Dow index that had the final say. From a dip to 2685 aluminium rallied in the afternoon, topping 2725 in the pm sessions. Locals attributed the buying to short-covering (long-term) CTAs and to options traders hedging against upside exposure, while large-scale producer selling was ominously missing.
C-3m eased a little overall with interim carries staying linear, while the entry of the January prime date (17th) saw the tail end backwardation hold steady. Forward rates nudged wider by some $0.50-$1.00/mth all the way to the end of 2010.
On Thursday morning trading in Asia resumed c. 2710 and in steady turnover the market had held there at time of writing, picking up as far as 2730 currently as it revisited Tuesday’s peak. Success or failure here, at the upper boundary of a 4½-month range, should dictate the direction of this market in the days/weeks ahead, wrote Cliff Green Consultancy. A break higher could support advances towards 2780/90 and another $100 higher after that, while failure was likely to trigger renewed bouts of weakness, they concluded.
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