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SMM Morning Review - 2010/5/26 Aluminum Market
May 26,2010 10:04CST
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SHANGHAI, May 26 (SMM) -- LME base metals prices retreated last night. LME aluminum prices opened at the daily high of USD 2,080/mt, but later slipped all the way, with the lowest prices reported at USD 1,988/mt, and finally prices ended at USD 2,018/mt, down USD 66/mt compared with the previous trading day, or down 3.17%. Total trading volumes reported 140,304 lots, and total positions were 718,472 lots, up 2,947 lots. LME aluminum inventories declined by 4,975 mt to 4,573,750 mt.

The US Conference Board released on May 25th that the US consumer confidence index was 63.3 in May, setting a record high since March 2008. Amid stronger US economic recovery, directors at three Federal Reserve banks in Kansas City, St. Louis and Dallas called for an increase in the discount rate from 0.75% to 1% on the Board of Governors meeting in anticipation of normalizing the spread between the discount rate and the benchmark federal funds rate. However, most governors believe the Federal Reserve should continue the loose monetary policy in consideration of weak job market in the US, and market players predict the Federal Reserve will extend the monetary policy tightening to at least 2011. The euro dropped to 1.21 against the US dollar yesterday since the European market was still suffering from sluggish economy and financial debt crisis, and the European stocks also closed at an 8-month low, exerting great pressure on metals prices.

The euro bottomed out before closing, helping LME metals prices to pare some losses recorded in the morning session on the electronic trading, and SHFE aluminum prices opened slightly higher, but SMM predicts SHFE three-month aluminum contract prices will test the 10-day moving average today in view of uncertainties surrounding the macro economy.      

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


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