As we signed off Monday aluminium had tumbled from a brief high at 2754 to a low of 2674 on turnover of more than 6,000 lots, as funds and CTAs exited investments across the board. The move was a continuation of last week's that had seen liquidation in global equities and commodities, as speculators threw the proverbial baby out with the bath water. In the end the light metal bottomed not much further, at 2664 mid-session, recovering to 2717 in the afternoon on consumer bargain hunting, only to rattle off again in the closing stages. Volumes remained very high throughout the day.
Long liquidation saw nearby tightness fall away too, as open interest between C-Mar21 shrank by 13,000 lots, while overall OI receded by 8,000 lots. However, the dominant long in the LME's WC report stayed at 90+%, as at cob Friday. Forward movement was orderly with rates slipping by only $0.50-$1.00/mth, while remaining static in 2009 and 2010.
Volumes were about half of yesterday's levels as prices recovered gingerly on Tuesday morning; at time of writing the market had lifted from 2690 to 2720 with a not-too-shabby 3,500 lots changing hands. Residual fund/CTA liquidation remained in evidence for aluminium, while the rest of the complex had reverted to ‘normal', locals reported. Bargain hunting provided support, as had a 4,000t net stock fall on the LME, they said. In their latest report Cliff Green Consultancy said they had returned to the sidelines with the market back in its trading range of the past 9 months.
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