SMM Morning Review - 2010/7/16 Aluminum Market

SHANGHAI, July 16 (SMM) -- LME aluminum prices opened at USD 1,998/mt, with the highest level and the lowest level at USD 2,033.75/mt and USD 1,992/mt, respectively, and finally ended at USD 2,017/mt, up USD 7/mt compared with the previous trading day, or up 0.35%. Total trading volumes reported 753,955 lots, up 830 lots. LME aluminum inventories increased by 5,825 mt to 4,381,725 mt.  

China's Government announced that China's GDP in 1H grew by 11.1%, while China's CPI rose by 2.6%, slightly weaker than expected, but the economic data did not trigger market concerns that China's economy will slow significantly, instead, it slightly boosted overall financial markets. The US government also released a stream of economic data: the industrial production in June rose by 0.1% compared with May levels; the June PPI slipped by 0.5% compared with May levels; the initial jobless claims last week fell to 429,000, lower than expected level of 450,000.

The US economic data was mixed, coupled with the Federal Reserve officials' pessimistic attitude toward economic outlook, investors adopted a cautious attitude toward market outlook. The US stock markets closed with slight declines, and market players put their focus on the US's CPI set for release on Friday. The European stock markets closed with declines due mainly to the negative impact from the US manufacturing industry. LME aluminum inventories posted an unexpected growth, but the weakening US dollar showed strong support to aluminum prices. Meanwhile, Alcoa raised its estimate for global aluminum consumption in 2010, also supporting LME aluminum prices to move higher last night.

SHFE aluminum prices opened higher positively affected by rising LME aluminum prices, and SMM predicts spot discounts will expand gradually today in view of recent weak consumption, which will in turn drag down SHFE aluminum prices, so SMM expects SHFE 1010 aluminum contract prices to move between RMB 14,850-15,000/mt.          

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