SMM Morning Review - 2010/6/3 Aluminum Market

SHANGHAI, June 3 (SMM) -- LME base metals prices continued to move on a downward track yesterday. LME aluminum prices opened at USD 1,985/mt, with the highest level and the lowest level at USD 1,996/mt and USD 1,962/mt, respectively, and finally prices ended at USD 1,985/mt, down USD 5.5/mt compared with the previous trading day, or down 0.28%. Total trading volumes reported 156,728 lots, and total positions were 740,803 lots, up 2,550 lots. LME aluminum inventories declined by 7,725 mt to 4,548,450 mt.

The Purchasing Managers' Index (PMI) for China's manufacturing sector was 53.9% in May, slightly lower than a Reuters' survey of 54.0, and significantly down from April levels of 55.7. Meanwhile, HSBC's China PMI dropped in May to an 11-month low of 52.7 from 55.2 in April. Market players began to worry that China's measures to curb domestic real estate market have exerted negative impact on expectations of sustainable economic growth in the future, and were also concerned about China's consumption of base metals in the future. The National Association of Realtors (NAR) announced on Tuesday that the pending home sales in the US rose by 6.0% to 110.9 in April, setting a new high over six months, with the growth rate higher than estimated 5.0%. 

LME aluminum price falling below USD 2,000/mt does not mean aluminum prices will fall further. SMM predicts SHFE three-month aluminum contract prices will re-test the support level of RMB 15,000/mt today after experiencing significant declines yesterday, and special focus should be put on stock market movements and the US dollar index trends today.        
        
To contact the writer on this report: ericzhang@smm.cn

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