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SMM Daily Review – 2011/8/22 Aluminum Market
Aug 23,2011 09:25CST
SMM Insight
Most active SHFE 1111 aluminum contract opened higher at RMB 17,250/mt and closed at RMB 17,215/mt, up RMB 45/mt or 0.26%. Spot aluminum mainly traded at RMB 17,750-17,800/mt in Shanghai.

SHANGHAI, Aug. 23 (SMM) – Most active SHFE 1111 aluminum contract opened higher at RMB 17,250/mt and closed at RMB 17,215/mt, up RMB 45/mt or 0.26% on August 22nd. Total positions of the contract added 3,000 lots in the morning which pushed the contract to a highest intraday price of RMB 17,295/mt, but finally dropped 804 lots due to profit taking in the afternoon. Transactions during the day dropped by 50% and were mainly short swing speculation activities due to cautious market sentiment. SMM expects the contract to keep fluctuating near RMB 17,200/mt in the short term as a combined result of insufficient upward momentum and positive high premiums, while future trend is still hard to predict.

Spot aluminum in Shanghai was mainly traded at RMB 17,770-17,800/mt in the morning of August 22nd, with premiums of positive RMB 230-250/mt over SHFE current-month aluminum prices. Despite high selling interest among goods holders, only small volumes of transactions were reported in the morning due to low buying interest among both downstream and middlemen. Mainstream trading prices slightly moved down to RMB 17,750-17,770/mt in the afternoon following falling of SHFE aluminum prices caused by profit taking. Transactions were rare as downstream and middlemen took a wait-and-see attitude.

SMM weekly average aluminum ingot price during August 15th to August 19th was RMB 17,805/mt, down RMB 111/mt or 0.62% from previous week. Concerning aluminum price trend in the future, a recent SMM survey shows 75% of respondents in the aluminum market are neutral. They believe the downward pressure from sluggish global economy will be offset by positive fundamentals. 19% of respondents are optimistic, believing little chance exists for a plunge of aluminum prices in the short term and downstream consumption improvement will provide upward momentum. Remaining 6% of market players expect a drop of aluminum prices due to weak global economy, high inflation pressure, rate-hike rumors as well as tight capital supply at end of month.

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