SMM Morning Review - 2010/2/25 Aluminum Market

SHANGHAI, Feb. 25 (SMM) -- Yesterday, LME aluminum prices opened at USD 2,116.2/mt, with the highest level and lowest level at USD 2,141.5/mt and USD 2,105/mt, respectively, and finally prices ended at USD 2,138/mt. Total trading volumes reported 6,634 lots, and positions were 697,826 lots. LME aluminum inventories declined by 4,475 mt to 4,583,875 mt.

The moderate market transactions in Chin after the holiday generated international market concerns, and commodities prices were at a dilemma currently, since long sentiment was weak due to signal of monetary policy tightening in China and the US, while market players remained optimistic toward future demand in view of the approach of seasonal peak demand period in China. Meanwhile, the US dollar index advanced to the pressure level, with resistance expected on its upward track, so any downward room for commodities prices will be limited.

Global investors paid special attention to the rapid increases of commodities prices in 2009, and the US government raised the discount rate, which was interpreted as concerns over the dramatic growth in raw materials prices, but not as the signal of transformation of monetary policy. The US Department of Commerce announced on Wednesday that the new home sales in January dropped by 11.2% to an annual rate of 309,000 units after quarterly adjustment, setting a new high since 1963. In addition, Fed Chairman Ben Bernanke told Congress on Wednesday a weak job market and tame inflation warrant low interest rates for "an extended period". In this context, SHFE 1005 aluminum contract prices will continue to fluctuate higher today, with prices expected to test the resistance level of RMB 17,000/mt.

To contact the writer on this report: angelawang@smm.cn

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