SMM Morning Review - 2010/3/16 Aluminum Market

SHANGHAI, Mar. 16 (SMM) -- Yesterday, LME aluminum prices opened at USD 2,259/mt, with the highest level and lowest level at USD 2,259/mt and USD 2,223/mt, respectively, and finally prices ended at USD 2,230/mt. Total trading volumes reported 6,602 lots, and positions were 723,163 lots. LME aluminum inventories declined by 6,075 mt to 4,512,725 mt.

Market expectations of interest rate hikes in China increased, since Premier Wen Jiabao said Chinese yuan (RMB) is not undervalued, reducing expectations of RMB appreciation and increasing expectations of interest rate hikes. The US dollar index recovered slightly to above 80 supported by the growing expectations of increases in trade frictions between China and the US. The Federal Reserve announced on Monday that the industrial output in February rose by 0.1% on a monthly basis, with the capacity utilization rate reaching 72.7%, higher than market expectation of 72.6%. The US dollar index will strengthen in the short term, since the debt crisis in Euro zone failed to be resolved effectively, so base metals prices will fall further under the pressure of weak market fundamentals and tighter money supply in the near term.

SMM predicts SHFE 1006 aluminum contract prices will likely fall further today, with prices expected to move in the RMB 16,500-16,700/mt range.

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

Copyright © SMM. All Rights Reserved

None of this material may be used for any commercial or public use in any forms or means, without the prior written consent of SMM. For reproduction issue, please contact us by email: service.en@smm.cn