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SMM Morning Review - 2010/7/27 Aluminum Market
Jul 27,2010 10:05CST
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SHANGHAI, July 27 (SMM) -- LME base metals prices surged yesterday. LME aluminum prices opened at USD 2,026/mt, with the highest level and the lowest level at USD 2,063/mt and USD 2,026/mt, respectively, and finally ended at USD 2,056.5/mt, up USD 26/mt compared with the previous trading day, or up 1.3%. Total trading volumes reported 102,981 lots, and total positions fell slightly to 725,562 lots. LME aluminum inventories declined further by 5,325 mt to 4,404,650 mt.

The results of stress tests on European banks have eased market concerns. In addition, the US government released yesterday that new home sales in June rose by 23.6%, coupled with positive FedEx Corp.'s earnings prospects, allowing European and the US stock markets to extend rallies last night, with Dow Jones Industrial Average rising by over 100 points. The euro advanced to USD 1.30, and investors' risk appetite improved as well. In response, long position momentum in the US dollar index weakened, with the index falling to below 82, hitting a new low since May 4th, 2010. The lower US dollar index helped push up base metals prices, but LME aluminum prices were weaker than other base metals, and lacked further upward momentum above USD 2,050/mt. 

SHFE aluminum prices opened slightly lower today, and the lack of speculative funds after continued price increases becomes the major factor to limit further upward momentum in aluminum prices. SMM predicts SHFE 1010 aluminum contract prices will test the 60-day moving average of RMB 15,250/mt today.


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