SMM Morning Review - 2011/5/6 Aluminum Market

SHANGHAI, May 6 (SMM) -- On May 5th, both Bank of England and European Central Bank announced to keep interest rates unchanged as market expected. Later, the US Labor Department announced that the initial claims for jobless benefits soared to 474,000 in the week ending April 30th, setting a new high since August 2010, an indication of deteriorating job markets in the US. In addition, the global inflationary pressure kept rising, and the economic growth slowed down, both helping hamper the recovery in demand. As a result, investors rushed to search risk aversion, helping push up the US dollar index to above 74.

Commodity markets experienced large-scale sell-offs, and LME aluminum prices tumbled continuously to below 30-day moving average after opening lower, with prices hitting an intraday low of USD 2,621.8/mt. Global economic data was disappointing, the US dollar index soared, and crude oil prices fell below USD 100/bbl, all causing short position momentum to gain in LME aluminum market. Trading volumes increased by nearly 20,000 lots, and LME aluminum prices finally closed at USD 2,639/mt, down USD 109/mt or nearly 4% compared with the previous trading day, with prices falling to a new low since April 1st, 2011.

Today, LME aluminum prices will rally after falling for two consecutive days, with prices expected to move between USD 2,600-2,650/mt. SHFE 1107 aluminum contract prices are expected to test the support at RMB 16,500/mt after opening lower. Spot aluminum is expected to be traded at discounts of negative RMB 50-0/mt over SHFE current-month aluminum contract prices, and the wait-and-see sentiment is dominating spot markets, and traders may be less willing to move goods.  

Copyright © SMM. All Rights Reserved

None of this material may be used for any commercial or public use in any forms or means, without the prior written consent of SMM. For reproduction issue, please contact us by email: service.en@smm.cn