[Al] SMM Morning Review - 2009/9/25 Aluminum Market

SHANGHAI, Sept. 25 (SMM) -- Yesterday, Major central banks including the Federal Reserve announced plans to gradually reduce the US dollar funds in the banking system, suggesting that the withdrawal of monetary stimulus measures may have entered the implementation phase. In the mean time, the National Association of Realtors announced the existing home sales in August dropped by 2.7% on a monthly basis to a 5.1 million annual rate, lower than previous expectations. As a result, market concerns over economic outlook increase the demand for US dollar risk-avoidance and the US dollar index climbed to 77 points again.

    Continuous increases in LME copper inventories depressed copper prices and LME copper prices dropped b below the support level of USD 6,000/mt. LME aluminum prices remained firm, and opened at USD 1,870/mt, and closed at USD 1,835/mt, with the lowest price of RMB 1,825/mt.

    Investors have paid more attention to market fundamentals and adopted a cautious attitude towards purchases since the start of September, and the positive economic data exerted very limited impact on market sentiment. The weak housing data generated the pessimism of investors with regard to LME nickel market fundamentals, and the tightening trend for capital also caused investors concerns over base metal prices. In this context, aluminum prices will likely rebound today, but the USD 1,900/mt will remain the resistance level.

    SHFE aluminum prices are expected to follow suit. Any downward movement for aluminum prices will be limited despite of low sentiment in stock replenishment before National Day holiday, so the purchasing interest is expected to become higher when aluminum prices are RMB 14,500/mt, so domestic aluminum prices are expected to move in the RMB 14,550-14,800/mt range today.

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