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SMM Morning Review - 2010/1/5 Aluminum Market
Jan 5,2010 10:14CST
smm insight

SHANGHAI, Jan. 5 (SMM) -- Yesterday, LME aluminum prices opened at USD 2,248/mt, with highest and lowest level at USD 2,278/mt and USD 2,240/mt, respectively, and finally prices ended at USD 2,267/mt.  Total trading volumes reported 8,121 lots, and positions were 683,477 lots. LME aluminum inventories increased by 4,475 mt to 4,624,425 mt.

The US Institute for Supply Management (ISM) announced on Monday that the manufacturing index in December was 55.9, higher than previous forecast of 54.3, rising for five consecutive months. China announced that China Manufacturing Purchasing Managers Index (PMI) in December 2009 was 56.6%, up 1.4 percentage points compared with October levels. The manufacturing index in both China and the US has shown a strong upward momentum, helping push up base metals prices. Recently, the US dollar index fluctuated due to market choice between expectations of interest rate hikes and expectations of economic recovery (to choose the US dollar who was strong recently, or to choose higher-risk assets). The US will release the non-farm employment data in December this weekend, may leaving a direction for the US dollar.

Recently, the optimistic expectations of economic recovery further helped push up base metals prices. Although the plunged A-share stock market caused domestic base metals prices to loss previous gains yesterday, the optimistic momentum will remain strong today. Yesterday, LME aluminum prices closed up slightly, which will help support SHFE aluminum prices to move higher today. In this context, SMM predicts SHFE 1004 aluminum contract will move in the RMB 17,200-17,400/mt range today.


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