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SMM Morning Review - 2010/8/10 Aluminum Market
Aug 10, 2010 10:02CST

SHANGHAI, Aug. 10 (SMM) -- LME aluminum posted the weakest performance among all base metals on August 9th. LME aluminum prices opened at USD 2,211/mt, with the highest level and the lowest level at USD 2,215/mt and USD 2,180/mt, respectively, and finally ended at USD 2,182/mt, down USD 13/mt compared with the previous trading day, or down 0.59%. Total trading volumes were 159,768 lots, and total positions were 723,202 lots, down 2,633 lots. LME aluminum inventories declined by 6,025 mt to 4,391,650 mt.

Market expectations of higher copper consumption were gaining along with steady declines in copper stocks, and market players were optimistic toward the upcoming China's economic data, helping push up copper prices in the morning session, but later speculative funds showed clear signs of withdrawing. The Federal Reserve (Fed) will announce the result of interest rate meeting tonight, and market players predict the Fed will further ease monetary policy in its statement due to deteriorating employment data in the US. As a result, the European and the US stock markets closed with gains. In addition, Banque BNP Paribas predicts aluminum market will be in excess of 2.2 million mt surplus in 2010, helping depress recent bullish aluminum prices, and LME aluminum prices closed with declines as a result. 

SHFE aluminum prices opened slightly lower today negatively affected by falling LME aluminum prices, but SHFE 1011 aluminum contract prices received strong support at the 5-day moving average. Although now is the traditional low demand period for aluminum, aluminum consumption remains bullish. Meanwhile, domestic aluminum stocks are on a downward track, which will support aluminum prices strongly. SMM predicts SHFE 1011 aluminum contract prices will test the support at the 5-day moving average today, with prices expected to hover between RMB 15,600-15,800/mt. The Fed's Open Market Committee tonight and China's economic data due for release tomorrow will become the focus of market players.    


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