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SMM Morning Review - 2010/7/8 Aluminum Market
Jul 8,2010 10:20CST
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SHANGHAI, July 8 (SMM) -- LME aluminum prices opened at USD 1,979/mt, and later slipped to the daily low of USD 1,966.5/mt, but then rebounded to the daily high of USD 2,008/mt as the US dollar index fell to below 84, and finally prices ended at USD 1,987/mt, down USD 10/mt compared with the previous trading day, or down 0.5%. Total trading volumes reported 160,579 lots, and total positions were 740,750 lots, down 18,083 lots. LME aluminum inventories increased by 4,700 mt for the first time over two weeks, to 4,409,550 mt.

The US stocks increased significantly on Wednesday led by banking shares, and Dow Jones Industrial Average even experienced a growth of 283 points, and finally closed at 10,018.28 points, up 2.82%. European Union regulators are carrying out stress tests on 91 banks, accounting for 65% of the area's banking industry, to examine whether they can withstand a shrinking economy and a drop in government bond values. The lenders being tested include 14 from Germany, 6 from Greece and 4 from the UK. A report shows the result of stress tests may be better than expected, stimulating the European stocks to close with gains. Meanwhile, the euro continued to strengthen against the US dollar, causing the US dollar index to fall below 84 last night, hitting a new low over two months. Although the rise in LME aluminum inventories does not change the overall downward trend of aluminum inventories temporarily, market concerns over future demand for aluminum persist. In addition, LME aluminum prices are still facing strong resistance at the USD 2,000/mt mark.

SHFE aluminum prices will edge higher supported by weakening US dollar and rebounding stock markets recently, but any upward room for aluminum prices will be limited, and the sustainability of aluminum prices will face heavy pressure following rising mainstream traded prices, as market players were pessimistic toward aluminum prices. 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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