MI Comment: Aluminium holds lower, lacks shine

It all looked like doom and gloom as we signed off on Friday, with aluminium having bottomed at 2566 late in the premarket, some $90/t off the opening. Selling again looked like a combination of liquidation and fresh computerised CTA selling, while at the lower end consumers and longer-term value-oriented investors mopped up. It turned out to be the low of the day, with values recovering over the afternoon as far as 2639. A weak set of US housing starts and new building permits data saw the light metal return to 2600 in the pm kerb, before steadying on profit-taking from opportunistic shorts.

Nearby contangos narrowed somewhat with Dec27-Jan17 in to 8.00c (10.00c), while forward backwardations steadied marginally in 2007 and 2008 after falling in preceding days.

So far on Monday morning 3-month turnover stood at a dismal 624 lots with prices trading patchily between 2645 and 2610, hovering halfway for the couple of hours up to time of writing. A cross down of the 10-day through the 30-day moving average for the first time since the end of September weighed on the market, while rumours in the financial markets of a(nother) $12 billion-hedge fund being in trouble also undermined confidence. Copper was holding steady presently on developments in Chile, though aluminium seemed to lack its natural lustre. Cliff Green Consultancy was looking to trade from the short side, they wrote in a daily report, eyeing depths as far as 2400 eventually, after a sustained break below 2550.