The weight of forward producer selling had prevented a challenge of aluminium's resistance at 2830 recently and as nearby tightness folded, it looked like longs bailed out on Wednesday. The dollar fell as the Democrats posted gains in the US elections, while oil recovered on lower than expected crude stocks there, but it was of no comfort. Copper had perked up in the premarket, though with (LME) stocks on the increase and prices trading sideways for some time, gravity was pulling the red metal back towards $7000. The click-and-hitters were happy to have Select back online and volumes rose as aluminium traded down through the 10-day moving average at 2775. From a very early high of 2800 in Asia, 3-months lost exactly $100 on the day, eventually bouncing mildly off a 2700 low in the pm kerb.
The key factor in aluminium's demise had been hefty lending both within C-3m -- notably Dec-3m – and beyond there, with some of the market's larger players said to be positioning themselves for a downward "correction". Dec20-27 was rated Level (2.00b) and Dec27-Jan17 now at 2.50c (Level), while the backwardation in Jan-3m slimmed down to 4.00b (7.00b). Forwards were also cut with 2007 shedding $2.00/mth, 2008 $1.00/mth, 2009 up to $2.00/mth and 2010 up to $1.50/mth.
Cliff Green Consultancy in their latest report labelled the move 'corrective' and retained a positive outlook with the medium term trend having "clearly improved". The trading strategists warned that a break beneath 2700 would be 'disappointing', although a hold here would encourage a swift test of the important 2830 region, they added. This optimism seemed shared by plenty of buyers at these lower levels on Thursday morning with the market so far trading back up from 2706 to 2742 on turnover of 2,330 lots.
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