We signed off Friday's aluminium Comment with the warning that the light metal was not "out of the woods yet" technically, with the market so far not having established itself above 2730, according to Cliff Green Consultancy. Before we went to press prices did again clip 2750 early on, though the action after that was less than convincing as values chopped around in thin turnover. The premarket had bottomed at 2715 and after rebounding briefly to 2746, prices drifted off again over the afternoon, ending near the lows as local longs squared up ahead of the weekend and this week's (UK) school holidays. Weaker oil and gold markets added to the air of disappointment as the session came to a close. Collective 3-month turnover for the LME complex on the day was less than 9,500 lots, locals said.
Overall, nearby spreads tightened, though contangos to Dec 20 eased somewhat. The tighter portion was Dec-Jan, where Dec20-22 was rated at 4.50b (1.32b) and Dec22-Jan17 at 17.50b (17.18b). Forward rates were $1.00/mth steadier in 2007 and easier elsewhere, with 2010 the biggest loser by slipping up to $1.50 per month.
Volumes remained scarce on Monday morning with aluminium bouncing around between 2735 and 2717 on less than 1,000 lots at time of writing. Oil had fallen, the dollar was on the rise across the board and not many players seemed to want to play. CGC in their latest report on Friday night suggested that the market's 'overbought' condition and its failure (so far) to capitalise on its upside break meant that a fresh period of correction or 're-consolidation' was now likely. It pegged nearby support at 2660/70. Last at 2729.
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