SMM Morning Review - 2010/9/13 Aluminum Market

SHANGHAI, Sept. 13 (SMM) -- Last Friday, the US wholesale inventories in July rose unexpectedly, and US stocks closed with mild gains as a result. Base metals prices remained pessimistic, and although China's import data for August was positive, the panic sentiment caused by plunging LME aluminum prices on Thursday still existed in the market, and trading sentiment remained lackluster. Meanwhile, the US dollar index advanced. As a result, LME base metals prices closed with declines last Friday.     

LME aluminum prices opened at USD 2,120/mt, with prices hitting the highest level of USD 2,128/mt, but later prices dipped all the way after the ending of Asian trading hours, and finally closed at USD 2,100/mt, down USD 5/mt compared with the previous trading day, or down 0.2%. Total trading volumes were 138,408 lots, and total positions increased slightly by 887 lots to 669,005 lots. LME aluminum inventories declined by 5,100 mt to 4,405,700 mt.

SHFE aluminum prices opened higher today, with SHFE 1012 aluminum contract prices already hitting RMB 15,900/mt. Rumors of power restrictions to domestic aluminum producers have supported SHFE aluminum prices last Friday, and will continue to support aluminum prices in the future. However, China's National Bureau of Statistics announced on September 11th that China's August CPI rose by 3.5% on a yearly basis, and officials from China's related departments hinted the possibility of interest rate hikes in the near term, and once China decides to raise the interest rate, base metals markets will be heavily depressed. In this context, aluminum prices may continue to move in a narrow band, with the RMB 15,900/mt mark expected to remain the pressure level of SHFE 1012 aluminum contract prices.        

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