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SMM Morning Review - 2010/1/14 Aluminum Market
Jan 14,2010 11:17CST
smm insight

SHANGHAI, Jan. 14 (SMM) -- Yesterday, LME aluminum prices opened at USD 2,260/mt, with highest and lowest level at USD 2,318/mt and USD 2,230/mt, respectively, and finally prices ended at USD 2,310/mt.  Total trading volumes reported 10,828 lots, and positions were 707,598 lots. LME aluminum inventories declined by 5,250 mt to 4,598,975 mt.

The People's Bank of China (PBOC) announced on Tuesday to raise the deposit reserve requirement ratio by 0.5 percentage points from Jan. 18 this year, resulting in declines in global stock and futures markets, and investors’ sell-of activities caused SHFE 1004 aluminum contract to drop to daily limit. However, the significant declines in aluminum prices indicate the overestimation of money supply tightening, and LME base metals prices bottomed out last night given expectations of steady improvement in Chinese economy. The crude oil price movements indicated strong support at USD 78/barrel, signaling commodities prices will remain optimistic in the short term amid expectations of long-term economic recovery. The US dollar index fell further to below 77, but will remain on an upward track in the long term along with China’s move to curb inflation.

Aluminum prices will undergo corrections in the short term, since aluminum prices were mainly driven up by speculative funds. SMM predicts SHFE aluminum prices will fluctuate today supported by rising LME aluminum prices, with prices expected to move in the RMB 17,300-17,700/mt range.


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