SHANGHAI, Aug. 2 (SMM) – SMM surveyed 43 Chinese aluminum smelters about their opinions over aluminum price outlook.
See SMM forecast, please click: LME Aluminum to Underperform SHFE Aluminum Next Week, SMM Expects
About 56% of them expect SHFE 1610 aluminum to stabilize between RMB 12,100-12,300/mt and LME aluminum between USD 1,630-1,650/mt. Expectations for monetary easing in China will keep base metals prices at high levels. For SHFE 1610 aluminum, longs and shorts have been cautious recently, with resistance at the 20-day moving average and support at the 10-day moving average. If SHFE aluminum keeps rising, aluminum smelters will open short positions at highs for hedging purpose. Suppliers will be in no rush to sell now that liquidity has improved at the month’s start, with spot premiums expected at RMB 150/mt over SHFE 1608 aluminum.
Another 28% expect SHFE 1610 aluminum to rise above RMB 12,300/mt and LME aluminum return above USD 1,650/mt. Aluminum stocks in China’s five major markets are still at multi-year lows. The US dollar is weak as mixed US economic data have dampened chance for rate hike anytime soon.
The rest 16% are bearish that SHFE 1610 aluminum will fall below RMB 12,100/mt and LME aluminum at above USD 1,630/mt. Orders fell sharply at aluminum processors because of the off-season. Aluminum smelters are cutting ratio of aluminum liquid output and increasing output of aluminum ingot. More aluminum ingots will arrive at major consumption hubs as shipments recover, which will add to market supply.