SMM Morning Review – 2011/7/27 Aluminum Market

SHANGHAI, Jul. 27 (SMM) – The debt talk stalemate in the US has exposed the country to risks of default and downgrade of credit rating. Late on July 26th, a higher July Conference Board Consumer Confidence Index was released, but coupled with lower-than-expected new house sales data in June. As risk aversion sentiment grew, the US dollar index continuously fell and finally closed at 73.535, down 0.78% after hitting 73.446, a new low since May 5th.

After the US dollar index plunged, LME metals prices rose overnight. LME aluminum prices fluctuated upward with strong support at the moving averages and hit USD 2,659/mt. At the tail of trading, LME aluminum prices slightly fell and finally closed at USD 2,643/mt, up USD 28/mt or 1.07%. Total positions increased by 859 lots to 681,960 lots.

SMM expects LME aluminum prices to fluctuate between RMB 2,610-2,660/mt on July 27th. Most active SHFE 1110 aluminum contract prices are expected to open higher and fluctuate between RMB 17,800-18,100/mt. After spot aluminum prices broke through the RMB 18,000/mt mark, downstream purchase interest became extremely low, and spot premiums are expected to be positive RMB 30-80/mt over SHFE current-month aluminum prices.

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