SMM Aluminum Price Forecast (Nov. 14-18)

SHANGHAI, Nov. 14 (SMM) -- Signs of easing credit in China helped boost market sentiment, but long sentiment was weak, with SHFE three-month aluminum contract prices moving between RMB 16,200-16,400/mt early last week. SHFE three-month aluminum contract prices fell below RMB 16,000/mt on Thursday, dragged down by falling copper prices which fell by their daily limit. On Friday, aluminum prices gained back previous losses, supported by the withdrawal of short investors from the market.

In the spot market, supply surpluses intensified in East China, while SMM aluminum prices turned to discount over SHFE current-month aluminum contract prices. Spot aluminum prices fell in response to plunging SHFE aluminum prices, with prices still hitting new lows despite efforts by cargo-holders to maintain profit margins by keeping offers firm at RMB 16,000/mt. Buying interest was low given market pessimism, adding to market uncertainties over future aluminum price trends.

SMM predicts SHFE 1201 aluminum contract prices will try to remain steady at RMB 16,000/mt, and with prices expected to move between RMB 16,000-16,400/mt as quiet trading sentiment will limit any upward momentum in aluminum prices. Spot aluminum prices will remain at a discount between RMB 50-0/mt over SHFE current-month aluminum contract prices due to supply surpluses and weak demand. Market sentiment should be quiet.