SMM Morning Review - 2010/2/4 Aluminum Market

SHANGHAI, Feb. 4 (SMM) -- Yesterday, LME aluminum prices opened at USD 2,126/mt, with the highest level and lowest level at USD 2,155/mt and USD 2,075/mt, respectively, and finally prices ended at USD 2,090/mt. Total trading volumes reported 11,499 lots, and positions were 692,378 lots. LME aluminum inventories declined by 102 mt to 4,601,625 mt.

The economy in the Euro zone plunged due to high proportion of fiscal deficit. The Spanish government on Wednesday said it expected a fiscal deficit of 9.8% of gross domestic product in 2010, 7.5% in 2011 and 5.3% in 2012, greatly exceeding the warning level in the Euro zone. As a result, the US dollar index advanced, hitting again the pressure of 79.5. The Australian central bank announced to stop raising interest rate unexpectedly yesterday, also indicating the reassessment of previous optimistic expectations of economic recovery. The problems concerning the financial deficit and how to promote the sustainable and sound economic development in all countries have been highlighted in 2010 after economic stimulus plans were implemented in 2009, exerting downward pressure on future economy, which will in turn affect metals prices negatively. Special attention should be paid to the non-farm employment in the US to be released on Friday, which may show a direction to investors. ADP Employer Services announced on Wednesday that the US civil employment in January declined by 22,000, while the US civil employment in December was revised to a decline of 61,000. In this context, market players hope the better-than-expected US employment data will help improve current financial markets.

SMM predicts SHFE 1005 aluminum contract will continue to fluctuate today, with prices expected to move in the RMB 16,200-16,500/mt range.

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

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