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SMM Morning Review - 2010/6/29 Aluminum Market
Jun 29,2010 10:56CST
smm insight

SHANGHAI, June 29 (SMM) -- Yesterday, LME aluminum prices opened at USD 2,000/mt, with the highest level and the lowest level at USD 2,036.5/mt and USD 1,986.25/mt, respectively, and finally ended at USD 2,029/mt, up USD 31/mt compared with the previous trading day, or up 1.56%. Total trading volumes reported 122,999 lots, and total positions were 749,817 lots, up 770 lots. LME aluminum inventories declined by 5,775 mt to 4,440,625 mt.

The G20 summit concluded in Toronto on Sunday afternoon and released a statement that advanced economies plan to reduce their deficits in half by 2013 and will limit risky activity by banking sector. However, leaders also agreed that it will take longer time for some economies to cut budget deficits. Investors believe G20 summit took the same cautious attitude toward the recovery in global economy as the Federal Reserve, eroding their risk appetite.

The US economic data released on Monday was mixed. The US consumer spending in May was slightly higher than expected, but personal savings rose to an 8-month high. In other news, 13 aluminum plants in Henan province plan to idle 700,000 mt of annual production capacity over next several months due to lower aluminum prices and rising electricity prices, which produces a fifth of China's aluminum production. Investors opted for a cautious attitude in response to mixed economic news. The US dollar index advanced to 85.65 last night driven up by risk-aversion buying. LME aluminum prices faced pressure above USD 2,000/mt, and the facts that crude oil prices will remain high in the short term, and LME aluminum inventories will continue to decline will help support aluminum prices to some extent.

SHFE 1009 aluminum contract prices will continue to test the RMB 15,000/mt resistance level today. China’s aluminum producers began to cut production, but current production cuts failed to change aluminum market conditions, and any positive impact from production cuts on aluminum prices will be limited in the short term. SMM predicts SHFE 1009 aluminum contract prices will move between RMB 14,850-15,000/mt today. 
To contact the writer on this report: ericzhang@smm.cn


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