SMM Morning Review - 2010/9/27 Aluminum Market

SHANGHAI, Sept. 27 (SMM) -- The US economic data released on September 24th was mixed, but the housing starts in August surged by 10.5%, the largest growth rate since November 2009. The positive housing starts boosted market expectations of demand for base metals, and Dow Jones Industrial Average closed at 10,860.25 points, up 197.84 points, while crude oil futures closed at USD 76.49/bbl, with strong market optimism reported. In the mean time, the US dollar index fell below the key level of 80, and declined further before closing at 79.273, and base metals prices strengthened to all-time highs in response.

Trading sentiment was sluggish on the LME aluminum market as China's financial markets were closed for Mid-Autumn Festival holidays, but growing market optimism helped push up LME aluminum prices. Last Friday, LME aluminum prices opened at an intraday low of USD 2,280.5/mt, with the highest prices reported at USD 2,336/mt, and finally prices lost some gains and closed at USD 2,315/mt, up USD 30/mt, or up 1.31%. Positions increased by over 10,000 lots, while LME aluminum inventories declined to 4,369,550 mt.

SHFE 1012 aluminum contract prices opened at nearly RMB 16,000/mt today, and faced heavy pressure at this level. However, investors are generally optimistic toward market outlook, and if the Shanghai Stock Exchange Composite Index shows strong performance today, growing speculative funds will likely help push up SHFE 1012 aluminum contract prices to test the RMB 16,000/mt mark again. 

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