SMM Morning Review - 2010/1/25 Aluminum Market

SHANGHAI, Jan. 25 (SMM) -- Last Friday, LME aluminum prices opened at USD 2,242/mt, with the highest level and lowest level at USD 2,248/mt and USD 2,195/mt, respectively, and finally prices ended at USD 2,245/mt. Total trading volumes reported 13,018 lots, and positions were 696,119 lots. LME aluminum inventories declined by 5,675 mt to 4,635,075 mt.

China's move to tighten money supply and the US government's plan to restrict the US bank trading dampened investor enthusiasm with regard to base metals prices. As a result, LME metals prices showed mixed performance last Friday, and LME zinc prices which experienced significant growth previously supported by hot money plunged further, while LME nickel prices also lost previous gains in view of its weak market fundamentals. However, LME copper prices recovered supported by purchases after falling below USD 7,200/mt in view of strong Chinese consumption and positive market fundamentals in 2010, and LME aluminum prices were also supported by purchases after falling below USD 2,200/mt, positively affected by bad weather conditions in China.

LME aluminum prices closed at USD 2,245/mt after breaking through USD 2,200/mt, but the optimistic sentiment was not strong recently, with LME aluminum prices expected to fall further to test USD 2,170/mt. SHFE 1005 aluminum contract prices will rebound slightly today, and the uncertainty in recent aluminum price trends will likely help narrow the fluctuation range of SHFE aluminum prices, with SHFE 1005 aluminum contract prices expected to move in the RMB 17,100-17,350/mt range today.

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