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SMM Daily Review - 2010/1/7 Aluminum Market
Jan 8,2010 10:41CST
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SHANGHAI, Jan. 8 (SMM) -- SHFE aluminum prices opened high and moved higher, and SHFE 1004 aluminum contract plunged to RMB 17,200/mt from RMB 18,680/mt, with a fluctuation range of nearly 8%, and with a decline of RMB 1,485/mt. SHFE 1004 aluminum contract stabilized between RMB 17,700-17,850/mt range in the afternoon, and closed at RMB 17,835/mt. Positions of SHFE 1004 aluminum contract declined by less than 5,000 lots, with total positions of nearly 160,000 lots. Trading value reached more than RMB 44.7 billion, with a turnover rate of 311%. Although the profit-taking exerted greater downward pressure on aluminum prices, speculative funds did not withdraw from the market completely based on position levels, and the stabilized LME aluminum prices will likely given support to SHFE aluminum prices after slight reductions, and SHFE 1004 aluminum contract will struggle around RMB 17,000/mt in the near term.

In spot markets, spot traders adopted a wait-and-see attitude, since the slump in SHFE aluminum prices occurred before the spot transactions began, with no offers heard in the market. In the afternoon, spot offers increased from RMB 17,200/mt along with stabilized SHFE aluminum prices, with most deals made around RMB 17,250/mt. Market transactions were lackluster, and slumps in SHFE aluminum prices and uncertain trends of SHFE aluminum prices today generated a wait-and-see attitude of downstream consumers, but no sell-off activities by traders were reported, since they remained optimistic with regard to future spot aluminum prices. The heavy snowfall in north China resulted in supply shortages of coal and electric power, and CHALCO also raised alumina prices from January 1st, 2010. As electric power costs and alumina prices accounts for more than 60% of total aluminum production costs, the higher production costs will help support aluminum prices to advance, and selling prices for spot aluminum offered by CHALCO were RMB 18,100/mt, helping support spot aluminum prices to move higher.


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