SMM Morning Review - 2010/8/2 Aluminum Market

SHANGHAI, Aug. 2 (SMM) -- LME base metals prices soared last Friday. LME aluminum prices opened at USD 2,095/mt, with the highest level and the lowest level at USD 2,175/mt and USD 2,090/mt, respectively, and finally ended at USD 2,170/mt, up USD 76/mt compared with the previous trading day, or up 3.6%. Total trading volumes exceeded 100,000 lots, and total positions were 710,135 lots, up 249 lots. LME aluminum inventories declined by 5,325 mt to 4,385,300 mt.

Last Friday, data shows the US consumer confidence index in July was 67.8, slightly higher than expected. Meanwhile, 75% of enterprises released better-than-expected earnings reports among 300 enterprises, helping boost financial market sentiment. In addition, the US 2Q GDP slowed to a 2.4% annual rate from a revised 3.7% in 1Q, exerting strong pressure on the US dollar, and the US dollar index dipped to a three-month low in response, which helped push up base metals prices. LME aluminum inventories declined consecutively, coupled with rumors of the launch of aluminum exchange traded fund (ETF) and rising crude oil prices, LME aluminum prices led base metals prices increases, hitting a 11-week high, and transactions were bullish as well. 

SHFE aluminum prices opened significantly higher today, positively affected by rapidly rising LME aluminum prices, and SHFE 1010 aluminum contract prices succeeded in standing above the previous resistance level of RMB 15,500/mt, with the low-end of price range rising further. Special attention should be paid to China's stock market movements and spot aluminum market trends today, and SMM predicts SHFE 1010 aluminum contract prices will fluctuate between RMB 15,400-15,700/mt today, with prices expected to test the RMB 15,500/mt support level.  

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