SMM Morning Review - 2010/1/27 Aluminum Market

SHANGHAI, Jan. 27 (SMM) -- Yesterday, LME aluminum prices opened at USD 2,240/mt, with the highest level and lowest level at USD 2,240/mt and USD 2,205/mt, respectively, and finally prices ended at USD 2,222/mt. Total trading volumes reported 6,410 lots, and positions were 701,299 lots. LME aluminum inventories declined by 3,125 mt to 4,627,700 mt.

Yesterday, China's stocks plunged again due to lending curbs by banks and expectations of interest rate hikes, exerting negative impact on SHFE metals prices and LME metals prices. However, the lowest LME aluminum prices did not exceed the low level last Friday, and LME aluminum prices experienced much slower declines with the release of policies concerning liquidity curbs. Yesterday, China's central bank issued RMB 10 billion one-year treasury bills through open market operations, with the issue volume much lower than RMB 24 billion last Tuesday, and with interest rate remaining the same level of 1.9264% last Tuesday, signaling the liquidity curbs will temporarily slow.

Yesterday, large amounts of speculative funds flowed into market when the benchmark Shanghai Composite Index fell to 3,000 points, helping the index stand firm at 3,000 points, and SMM predicts China's stocks will not likely decline sharply today, which will in turn provide stable environment for futures market. SMM predicts SHFE 1005 aluminum contract prices will continue to fluctuate today, with prices expected to move in the RMB 17,000-17,400/mt range.

 To contact the writer on this report: angelawang@smm.cn

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