SMM Morning Review - 2010/6/4 Aluminum Market

SHANGHAI, June 4 (SMM) -- LME base metals prices continued to move on a downward track yesterday. LME aluminum prices opened at USD 1,995/mt, with the highest level and the lowest level at USD 2,022/mt and USD 1,930/mt, respectively, and finally prices ended at USD 1,956/mt, down USD 29/mt compared with the previous trading day, or down 1.46%. Total trading volumes reported 188,357 lots, and total positions were 751,097 lots, up 10,294 lots. LME aluminum inventories declined by 7,300 mt to 4,541,150 mt.

The US Department of Labor announced that the number of initial applications for unemployment benefits declined to 453,000 in the week ended on May 29th, while Reuters predicted this number would be 450,000, and this number in a weak earlier was revised to be 463,000. The falling initial claims for jobless benefits helped boost market confidence in the US economic recovery. Market players were concerned that European Central Bank will inject more cash liquidity into the Euro zone's financial system, and the euro weakened against most of its major counterparts as a result. Meanwhile, market players predict the US employment data in May to be announced by the US government tomorrow will report the largest growth rate since 1983, allowing the euro to fall below 1.22 and pushing up the US dollar index to above 87. Base metals prices slumped in response, but LME aluminum prices experienced the smallest declines among all base metals last night since crude oil prices soared by 2.4%.    

SHFE aluminum prices open low today, and SHFE 1008 aluminum contract prices will test the previous low of RMB 14,730/mt, and whether or not prices can stand steady at this level still depends on other base metals prices trends and financial market movements. SMM predicts SHFE 1008 aluminum contract prices will move between RMB 14,700-15,000/mt today.         
        
To contact the writer on this report: ericzhang@smm.cn

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