SMM Morning Review - 2010/1/28 Aluminum Market

SHANGHAI, Jan. 28 (SMM) -- Yesterday, LME aluminum prices opened at USD 2,224/mt, with the highest level and lowest level at USD 2,229/mt and USD 2,146/mt, respectively, and finally prices ended at USD 2,146.2/mt. Total trading volumes reported 14,693 lots, and positions were 701,512 lots. LME aluminum inventories declined by 3,900 mt to 4,623,800 mt.

Yesterday, the benchmark Shanghai Composite Index failed to stand firm at 3,000 points, and China's A-share stocks experienced slumps before closing, triggering concerns in global financial markets, and market concerns over China's move to tighten liquidity increased further. Last night, the US Department of Commerce announced that the new home sales in December declined by 7.6% to an annual rate of 342,000 from November levels of 370,000, setting a new low since March 2009, and the investor pessimism increased as a result, and base metals prices slumped in response.

SMM predicts China's A-share stock markets will remain weak in the near term, and the benchmark Shanghai Composite Index will not likely recover to 3,000 points today, with the pessimistic sentiment prevailing among market players. SMM predicts SHFE 1005 aluminum contract will dip below the support level of RMB 17,000/mt today. Technically, SHFE 1005 aluminum contract prices will fall to 60-day moving average line of RMB 16,600/mt, with prices expected to move in the RMB 16,600-17,000/mt range, and with struggles between long and short positions intensifying.

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

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