SMM Al Survey: Peak Season Retracts, Bearish Sentiment Grows

SHANGHAI, Sept. 20 (SMM) -- The SMM China Aluminum Ingot Trade Index for the week from September 13th to September 16th came out at 45.95%, which was below the balance line of 50%, and was down 5.8 percentage points from previous week. This indicated a prevailing bearish attitude in the market, which was due to remaining weak consumption which failed to meet the conventional peak season and dim outlook for global economies.

In order to objectively and accurately show China’s spot aluminum ingot trading market, SMM has surveyed spot aluminum ingot traders from different regions, of different types and scales, based on their total traded volumes, downstream purchase volumes, traders inventories, cash flows and employee numbers etc.

This survey has covered 40 aluminum traders with a total monthly traded volume of nearly 300 kt. These traders are located in Shanghai, Wuxi, Hangzhou, Nanhai, Tianjin and Shenyang.

The SMM China Aluminum Ingot Trade Index – Transaction Index dropped by 6.2 percentage points from previous week to 42.5%, which was below the 50% balance line. As downstream aluminum processors already stocked up before China’s Mid-Autumn Festival holiday, stock building was not seen following the holiday. Further more, weak global economy and collapsed consumption growth expectation also added to the bearish sentiment in the market. Continuous falling spot aluminum price, on the other side, also failed to boost downstream and middlemen buying interest, partially leading to contracted transaction volumes throughout the week.

The SMM China Aluminum Ingot Trade Index – Downstream Consumption Index ended its two-weak gain with a 12.5 percentage point drop to 41.3% below the 50% balance line. Continuation of weak consumption and capital pressure are two main reasons for this reverse. As capital pressure is mounting as the month-end approaches, it has become even more difficult for downstream consumption to improve.

The SMM China Aluminum Ingot Trade Index – Aluminum Price Expectation Index plunged by 26.2 percentage points to 22.5%, moving further from the 50% balance line. Aluminum price had stayed above RMB 17,700/mt since late August with expectations for spot aluminum consumption to improve in September. However, as the expectation did not come true in September, and with a dim future for global economy, SHFE copper and zinc hit new yearly lows, and bearish sentiment in the aluminum market also grew, which explained the plunge in this index.