We signed off Monday's report with a prediction from Cliff Green Consultancy that having failed to capitalise on its recent sojourn above 2730 and looking overbought, aluminium was likely to test support before heading higher. As it turned out, the market didn’t quite reach 2660/70, though from yesterday’s pre-rings level of 2729 prices did come off as far as 2684 at one point. The whole metals complex looked lacklustre as values drifted lower on indifferent trading, with a rallying dollar the primary driver. However, just as it looked like the markets were set for a long-liquidation session in the afternoon, what looked like a wave of fund money came rolling in, sweeping not only metals but all commodities higher. The light metal didn’t quite recover the morning’s earlier high of 2735, though the bounce took it back to 2724 before slipping at the close.
Nearby spreads were little-changed on the whole, though an extra 4 days rolled into Jan-3m, thus making the difference. Forwards too were much the same on balance, with 2007 slipping $1.00/mth, while beyond there movement was mixed, though not greater than $0.50/mth here and there to 2009. Rates in 2010 tightened by $1.00-$1.50/mth.
Tuesday morning and the LME complex was on the drift again in the absence of any follow-through speculative buying. Oil and gold were also softer, while the dollar so far held on to Monday's gains. Fundamentally traders looked to projections for further falls in alumina prices and creeping gains in primary output, though with continued stirrings around December and fund-led forays such as yesterday’s, the slide had been gradual so far. Select had reopened at 2710 and at time of writing the market had bottomed at 2670, just through the 10-day moving average at 2674. CGC continued to see short-term trends as "up", though with the upside break looking unconvincing, the trading strategists remained sidelined, they wrote in a report. A break of support c. 2660 could see falls of another $100, they added. Last at 2680.
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