SMM Morning Review - 2010/7/23 Aluminum Market

SHANGHAI, July 23 (SMM) -- LME base metals prices strengthened further on July 22nd. LME aluminum prices opened at USD 1,999/mt, with the highest level and the lowest level at USD 2,061.75/mt and USD 1,991/mt, respectively, and finally ended at USD 2,045/mt, up USD 37/mt compared with the previous trading day, or up 1.8%. Total trading volumes reported 129,130 lots, and total positions were 725,821 lots, down 6,317 lots. LME aluminum inventories returned to the downward track, down 4,075 mt, to 4,415,950 mt.

The economic data released by the US government on Thursday was mixed. Existing home sales were better than expected, but initial jobless claims last week were weaker than expected. However, a stream of strong corporate earnings reports helped offset the negative market news, and the US stocks strengthened as a result, with Dow Jones Industrial Average rising by over 200 points. The European stocks jumped yesterday as well due to unexpectedly positive factory orders and PMI data in May in the euro zone. China's Premier Wen Jiabao's speech on the expansion of domestic demand on Thursday helped increase consumption expectations to some extent, and gave a boost to commodity markets. In response, LME base metals prices closed with gains, with LME aluminum prices hitting a 7-week high. LME aluminum inventories declined again, but the sustainability of the decline in aluminum inventories remains unknown, so LME aluminum prices will still face challenges in the future.    

SHFE 1010 aluminum contract prices held steady above 15,000/mt supported by gains in LME aluminum prices, and although market consumption weakens, aluminum inventories continue to decline. SHFE aluminum prices face growing pressure at high levels, with special focus putting on financial market trends. 

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