After an initial flurry of Asian buying had taken aluminium to heights of 2835 early on Monday, the market ran out of gas as producer selling came to the fore. As we signed off yesterday prices had already slipped to 2812 on good turnover of 2,000+ lots, though when the rings began the market wilted under pressure from falling oil values and pervading weakness in copper. The decline to a lunchtime low of 2780 was rapid, though with plenty of lurking buyers such as our friends at Cliff Green Consultancy looking to bottom-pick c. 2770, it bounced just as quickly in the afternoon. The pm rings saw 3-months regain 2819 before ending the closing kerb session exactly unchanged.
Narrower immediate contangos and easier backwardations within C-3m left the overall spread unchanged. Forward rates were a tad firmer here and there, though by no means throughout, after early forward selling (borrowing) had pushed the whole curve deeper into backwardation in the premarket.
Tuesday morning saw prices steadier again at the opening in Asia, with locals reporting Japanese buying versus Chinese selling. Trading resumed via Select at 2818 and after a brief slip to 2810, prices were again well-bid on a cocktail of CTA short-covering and consumer buying. A number of analysts had revised upwards their price forecasts on the basis of China's latest tax move to limit the export of energy-intensive commodities. In the immediate term all eyes were now on the start of November (tomorrow), with fund watchers fully expecting aluminium's renewed strength to draw fresh investment via the CTA community. Volumes were lower than preceding sessions, though still healthy at 1980 lots currently. As we went to press towards the end of the premarket, values had topped 2827 with forward backwardations again bowing under the weight of all that selling.
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