SMM Morning Review - 2010/2/11 Aluminum Market

SHANGHAI, Feb. 11 (SMM) -- Yesterday, LME aluminum prices opened at USD 2,050/mt, with the highest level and lowest level at USD 2,070/mt and USD 2,020/mt, respectively, and finally prices ended at USD 2,045/mt. Total trading volumes reported 7,943 lots, and positions were 691,263 lots. LME aluminum inventories declined by 5,750 mt to 4,566,225 mt.

Yesterday, Bernanke said on the hearing of the House Financial Services Committee that the high employment rate, inflation control and inflationary expectations will make the interest rate remain low for a long period of time, but the Fed will raise the interest rate and cut the excessive reserves at a particular time, and will be more likely to raise the federal discount rate in the near future, and will consider the bank reserve rate as a major policy target rate. In this context, the US dollar index slipped after advancing to 80.31 yesterday, returning below 80. Market concerns over Greece debt crisis eased, and other countries in the Euro zone proposed support plans, further reducing market concerns over debt crisis. Although Bernanke's remarks raised market expectations of interest rate increases, the US dollar index will not likely remain strong before the US employment data shows positive trends. Customs data released yesterday in China shows although China's imports in January 2010 increased on a monthly basis, but fell by 15-20% on a yearly basis, triggering investor concerns over Chinese demand.

SMM believes the US dollar index will face pressure at 80, and although metals prices will meet difficulties on the upward track in the short term, any downward room for metals prices to fall has been limited. SMM predicts SHFE three-month contract aluminum prices will move narrowly in the RMB 16,450-16,700/mt range today.  

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

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