SHANGHAI, Feb. 3 (SMM) -- Yesterday, LME aluminum prices opened at USD 2,094/mt, with the highest level and lowest level at USD 2,128/mt and USD 2,072/mt, respectively, and finally prices ended at USD 2,128/mt. Total trading volumes reported 11,008 lots, and positions were 697,343 lots.

The US dollar index has fallen for two consecutive days after hitting 79.53 supported by the positive economic data in the US and the easing concerns over credit crisis in the Europe, with the index hitting the lowest 78.96 yesterday. Although the US dollar index closed above 79, the index is expected to fall further in the short term, which will give support to base metals prices. However, base metals prices will continue to fluctuate due to current low demand period and unstable investor confidence. The US financial deficit is deteriorating, which will hamper the economic recovery in 2010, and if the US government takes measures to lower the fiscal deficit, the tightening monetary policy should be implemented, which will in turn exert negative impact on the economic recovery and employment. The dilemma faced by the US government will draw more attention from investors, and will determine the base metals prices trends for a long time.

SMM predicts SHFE 1005 aluminum contract prices will advance further today, with prices expected to fluctuate around RMB 16,500/mt, but whether or not aluminum prices have fallen to the bottom line remains unknown, so the wait-and-see sentiment will still dominate the market in the future. 

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

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