SMM Morning Review - 2010/12/9 Aluminum Market

SHANGHAI, Dec. 9 (SMM) -- Market players held strong expectations that the upcoming China’s economic data for November during this weekend will show rising inflationary pressure, and they were waiting for China’s move to raise interest rates to combat inflation. However, any negative impact from these expectations on LME market was limited, and some investors even believe all negative news will be released after China's possible interest rate increases. In addition, the possible launch of exchange-traded fund (ETF) also improved risk appetite. The US dollar index once advanced to 80.405, but later fluctuated lower during European trading hours. LME base metals prices climbed significantly as LME copper prices surged to USD 9,000/mt, and LME aluminum prices also ended recent weakening trends.    

LME aluminum prices climbed steadily after opening at USD 2,325/mt last night, and finally closed at an intraday high of USD 2,375/mt, up USD 70/mt, or up over 3%. Inflows of speculative funds increased, and positions jumped by over 10,000 lots in response, while LME aluminum inventories declined by 5,800 mt to 4,281,425 mt.

SHFE aluminum prices failed to keep pace with LME aluminum prices, and showed signs of falling after opening high this morning, with prices testing the support at the 5-day moving average.                 

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