Aluminium Prices May Drop On Seasonal Lull

SHANGHAI, Jun 26 (SMM) – The most-traded SHFE 2307 aluminium contract opened at 18,550 yuan/mt at the night session of June 21 (last day before the Dragon Boat Festival), with its low and high at 18,370 yuan/mt and 18,590 yuan/mt before closing at 18,390 yuan/mt, down 155 yuan/mt or 0.84%. LME aluminium opened at $2,208.5/mt last Friday, with its low and high at $2,163.5/mt and $2,209/mt respectively before closing at $2,178/mt, a drop of $23.5/mt or 1.07%.
Expectation of US interest rate hikes will put great downward pressure on SHFE aluminium after the holiday. Restarts of idled aluminium capacity in Yunnan will grow supply pressure. Increased arrivals of aluminium ingots after the holiday will cause spot premiums to narrow. Demand outlook is not optimistic. To sum up, aluminium prices may drop, but low inventories will limit the downside room.