SMM Morning Review - 2010/7/2 Aluminum Market

SHANGHAI, July 2 (SMM) -- Yesterday, LME aluminum prices opened at USD 1,961/mt, with the highest level and the lowest level at USD 1,973.5/mt and USD 1,921.75/mt, respectively, and finally ended at USD 1,926.5/mt, down USD 51.5/mt compared with the previous trading day, or down 2.6%. Total trading volumes reported 178,548 lots, and total positions were 759,898 lots, up 11,600 lots. LME aluminum inventories declined by 6,050 mt to 4,422,025 mt.

The China Federation of Logistics and Purchasing (CFLP) said Thursday (July 1st) that the Purchasing Managers' Index (PMI) for China's manufacturing sector stood at 52.1 in June, lower than May levels of 53.9, since slowing global economic recovery and China's recent moves to cancel export tax rebates on some commodities depressed market confidence in economic development. The US economic data released on July 1st: The US initial claims for jobless benefits rose to 472,000 last week, higher than the forecast of 452,000; the US construction spending fell by 0.2% in May; the US Pending Home Sales Index in May declined by 30.0% on a monthly basis, and was down 15.9% on a yearly basis. The stream of negative economic data spurred market pessimism, and the US dollar index fell to around 84.5 as a result, while the euro strengthened to USD 1.2512 as capital pressure faced by the European financial institutions eased. Crude oil futures closed at USD 72.95/bbl, down USD 2.68/bbl. Base metals prices closed with declines, as concerns over whether or not demand for base metals will remain strong in 3Q offset any positive impact from previous declines in base metals inventories.

SHFE market was sluggish recently negatively affected by domestic stock markets. Aluminum producers were unwilling to move or ship goods given their losses, reducing market supplies and helping support domestic aluminum prices. SMM predicts SHFE 1009 aluminum contract prices will continue to fluctuate above the RMB 14,600/mt mark today.     
   
To contact the writer on this report: ericzhang@smm.cn

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