Tuesday was a day of two halves for aluminium, picking up initially after a week of heavy losses, only to fall back again in the afternoon. The contract accounted for more than half of the LME's total turnover on the day, with some observers suggesting that its weakness was attracting fresh selling, while (consumer) buyers were happy to soak up the large volumes on offer.
The only part of C-3m to remain in backwardation was C-Mar21, while all else reverted to contango. Despite talk in recent days that the dominant long had been dumping positions, one party remained at 90+% in the LME's latest WC warrant banding update as at cob Monday. Beyond 3-months, Q1 2008 eased most, by $4.00/mth, while elsewhere in '08, '09 and '10 rates slipped by up to $2.00/mth.
So far on Wednesday morning the market had been quiet approaching options declarations time, with prices in a 2700-2678 trading range and volumes c. 2,000 lots currently. With the market back in its broad range of the past 9 months, Cliff Green Consultancy looked for nearby support c. 2660 and again at 2610. A clear break below there signalled moves towards 2550, while a clearance of resistance up at 2820 was required to set up a retest of 2900.
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