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SMM Aluminum Price Forecast (Jun.18-21)
Jun 18,2012 15:37CST
smm insight
Source:SMM
As liquidity pressure eases, conditions in downstream sectors should also improve, but the most active SHFE aluminum contracts will remain volatile due to LME instability.

SHANGHAI, Jun. 18 (SMM) -- The rate cuts by China’s central bank provided only limited support, with the most actively traded SHFE aluminum contract hovering narrowly between RMB 15,820-15,950/mt and struggling at the 5-day moving average. Capital inflows into the aluminum futures market remained light, with contracts only around 6,000-7,000 lots. In China’s domestic market, as liquidity pressure eases, conditions in downstream sectors should also improve, but the most active SHFE aluminum contracts will remain volatile due to LME instability. Support is expected at RMB 15,800/mt, with the upper limit at RMB 16,000/mt. Spot discounts and premiums should be within RMB 30/mt and RMB 20/mt, respectively. There are market rumors that power rates in some regions of China will be cut and that some aluminum producers would then resume production, which may weigh down spot aluminum prices.

In the spot market, the selling interest was high as the delivery date neared, but purchases were still made on an as-needed basis due to weak orders. Spot prices headed near current-month SHFE aluminum, with both premiums and discounts staying within RMB 20/mt. Trading remained light. Spot discounts and premiums should be within RMB 30/mt and RMB 20/mt, respectively this week. There are market rumors that power rates in some regions of China will be cut and that some aluminum producers would then resume production, which may weigh down spot aluminum prices.

 

most active SHFE aluminum contracts
liquidity pressure

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