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SMM Morning Review - 2010/5/20 Aluminum Market
May 20,2010 10:16CST
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SHANGHAI, May 20 (SMM) -- Yesterday, LME aluminum prices opened at USD 2,030/mt, with the highest level and the lowest level at USD 2,030/mt and USD 1,984/mt, respectively, and finally prices ended at USD 2,002/mt, down USD 50/mt compared with the previous trading day, or down 2.44%. Total trading volumes reported 198,735 lots, and total positions were 712,687 lots, down 26,185 lots. LME aluminum inventories increased by 38,600 mt to 4,549,625 mt.

The US Department of Labor announced that the US consumer price index (CPI) for April fell by 0.1% due to declines in prices for energy, houses, automobiles, and garments, the first drop since March 2009. Excluding food and energy, the US core CPI was unchanged. The core rate rose by 09% from April 2009, the smallest increase since January 1966. The negative impact from Germany regulator's bans on naked short selling and naked credit-default swaps of euro-area government bonds continued, and inventors exited from the market as a result. Market players were concerned that Germany's moves were an indication of pessimism with regard to the euro, and large amounts of speculative funds may flow out of the market, which will in turn provide strong selling pressure for the euro.

Commodity market was also affected by market panic regarding the euro, and speculators withdrew their funds from base metals, crude oil and other commodity markets constantly, causing base metals prices to fall last night. LME aluminum inventories have increased sharply for two consecutive days, with total inventories again approaching 4.55 million mt, which will also weigh on LME aluminum prices in the future.

SHFE aluminum prices continued to test the low-end of price range recently, and SHFE three-month aluminum contract prices struggled strongly at RMB 15,000/mt, with strong pressure reported at the 5-day moving average. Short momentum will remain strong before other base metals and stock markets improve significantly, and SMM predicts SHFE 1008 aluminum contract prices will fluctuate between RMB 15,100-15,350/mt today.      

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


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