Aluminium clawed back some of the previous two days' losses on Tuesday, bouncing from a premarket low of 2722 to an afternoon high of 2766 before being dunked back to 2733 in the pm kerb. It was a mixed bag across the LME, with half the complex falling on the day, while aluminium, nickel and tin improved. However its performance looked unconvincing against a backdrop of low volumes and a slackening nearby contango, with the rise primarily down to technical short-covering after holding nearby support c. 2720. The chief executive of the newly enlarged UC Rusal, Alexander Bulygin, was quoted as saying that prices could rise to $4,000/t next year, as carmakers increased production of more fuel-efficient, lightweight vehicles. More immediately, locals' preoccupation was with the approaching end of the month and first quarter, while a fall in US consumer confidence helped to dampen enthusiasm.
The C-3m contango lengthened throughout, with only Apr18-27 remaining in backwardation at 2.00b (3.00b), while just one party was left in the LME's latest WC warrant banding update, in the 50-80% category. Forward rates were $0.50-$1.00/mth easier in H2 2008, though elsewhere spreads tightened by a similar margin as firmer 3-month prices drew forward selling interest.
Trading resumed on Wednesday morning at 2754 and values ebbed to a low of 2730, though total volumes were very low, in the order of some 500 lots only. Cliff Green Consultancy as at last night put the market's nearest resistance c. 2830, though the trading strategists were looking for supports around 2720, then 2660 to come under examination in the days ahead. Last at 2735.
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