SHANGHAI, July 14 (SMM) -- LME base metals prices strengthened yesterday. LME aluminum prices opened at USD 1,973/mt, with the highest level and the lowest level at USD 2,005/mt and USD 1,950/mt, respectively, and finally ended at USD 1,996/mt, up USD 25/mt compared with the previous trading day, or up 1.27%. Total trading volumes reported 107,709 lots, and total positions were 756,005 lots, up 1,908 lots. LME aluminum inventories declined by 6,375 mt to 4,383,550 mt.

Moody's Investor Service cut Portugal's sovereign-debt rating by two notches to A1, but stronger corporate earnings reports in the US and a smooth Greek treasury bill auction offset the negative effects of an earlier ratings downgrade on Portugal. Alcoa, the largest U.S. aluminum producer, posted a stronger-than-expected second-quarter profit, sending the European and the US stock markets higher, with Dow Jones Industrial Average closing up 146.75 points. Meanwhile, Greece's Public Debt Management Agency (PDMA) sold USD 2 billion of 6-month T-bills on Tuesday, and the euro hit a new high of 1.2738 against the US dollar over two months, and finally ended at 1.2716 last night. The lower US dollar index helped push up base metals prices, but the upward momentum in some metals was dampened by China's import data for June. LME aluminum prices posted a remarkable growth yesterday, since Alcoa raised its estimate for global aluminum consumption in 2010, boosting aluminum market sentiment.

SHFE aluminum prices are expected to stabilize today. However, market supply remains high, and aluminum alloy and aluminum profile producers may experience declines in their orders as the seasonal low demand period starts in summer. Although visible aluminum inventories decline steadily, aluminum prices still lack upward momentum, and will continue to fluctuate narrowly in the short term. SMM predicts SHFE 1009 aluminum contract prices will move between RMB 14,750-14,900/mt today.      

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

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