SHANGHAI, Apr. 5 (SMM) – Despite better-than-expected manufacturing data from China and the US, a stagnating euro zone manufacturing sector, a surge of over 10,000 mt in LME aluminum stocks and much higher-than-expected bond yields for Spanish debt again ignited risk aversion, pushing up the US dollar index while pressing down LME aluminum to USD 2,087.5/mt, a new low since January 10, during its three-day drop as of Wednesday. The light metal may shed more losses in the near term given strong resistance above.
The weakness of LME aluminum showed during the Qingming Festival will weigh on the Chinese aluminum market. SMM expects LME aluminum to test resistance at USD 2,100/mt and move between USD 2,070-2,120/mt during today’s trading. The most active SHFE aluminum contract for delivery in June is expected to hover between RMB 16,060-16,160/mt and is not likely to break through the 5-day moving average. Some downstream businesses will replenish stocks following financial settlements and the Qingming Festival. Buying at low-end prices will be slightly active, which may cause marginal premiums over the SHFE current-month aluminum price. SMM expects spot aluminum to trade between discounts of RMB 30/mt and premiums of RMB 20/mt over the current-month SHFE aluminum contract. Traded volume will see a slight uptick.