SMM Brief Review - 2011/10/19 SHFE Aluminum Futures

Aluminium Ingot January Production Analysis & February Forecast

According to SMM's research findings, Yunnan Province is currently experiencing a dry season, with hydropower contribution remaining at a relatively low level. Enterprises have no immediate plans for production resumption and await clearer policy guidance from the power sector.

The implementation of Indonesia's ban on bauxite exports since June last year has led to bauxite surplus, brought challenges to consume domestically as the Indonesia's alumina plants have limited capacity. Ronald Sulistyanto, Chairman of the Indonesian Bauxite and Iron Ore Entrepreneurs Association (Asosiasi Pengusaha Bauksit dan Bijih Besi Indonesia - APB3I), highlighted the struggle to secure external investment for alumina plant projects, while some entrepreneurs are forced to cut costs or halt production. However, there is hope for relief through potential relaxation of the export ban policy. Efforts are underway to boost alumina production capacity, although challenges persist in addressing the surplus bauxite issue.

At current spot prices, the smelters generate strong cash flow.

LME aluminum will trade at USD 2,005-2,035/mt on Thursday, and SHFE 1710 aluminum will regain losses seen on Wednesday’s night trading, with price estimated at RMB 16,000-16,250/mt. 

SHFE 1705 aluminum started at RMB 13,810/mt and ended at RMB 13,960/mt.

LME aluminum will trade at USD 1,860-1,890/mt on Friday and SHFE 1705 aluminum will fluctuate between RMB 13,550-13,850/mt.

SHFE 1704 aluminum opened at RMB 14,225/mt and closed at RMB 14,145/mt.

Prebaked anode prices in China’s domestic market rose by about 620 yuan per tonne in January 2017 after Shandong Weiqiao raised its procurement price. 

LME aluminum is predicted to range between USD 1,710-1,730/mt and SHFE 1702 aluminum will move at RMB 12,850-13,050/mt.