SMM Aluminum Price Forecast (Mar. 25-29)

SHANGHAI, Mar. 25 (SMM) – SHFE 1306 aluminum contract prices moved lower last Monday to RMB 14,595/mt, but hovered around RMB 14,700 for the remainder of the week due to struggles between longs and shorts. With sluggish spot aluminum consumption and growing oversupply pressure, prices of the most active SHFE aluminum contracts will unlikely climb to the 5-day moving average until more upward momentum is available.

Spot aluminum is the most resilient one among base metals last week. SHFE aluminum for June delivery plummeted last Monday, driving cargo holders to the sidelines. As a result, spot discounts did not expand even after SHFE 1304 aluminum contracts became the new current-month contract, with discounts holding firm between RMB 70-100/mt. Spot aluminum prices rose from RMB 14,470/mt to RMB 14,540/mt. Middlemen were actively bargain hunting, while downstream producers purchased only as needed. Later in the week, aluminum prices had little upward momentum, stimulating traders to move goods, but overall trading remained only moderate. 

In the coming week, the US dollar index should rise and test resistance at 83, keeping LME aluminum prices within a USD 1,900-1,960/mt range and SHFE 1306 aluminum contract prices between RMB 14,600-14,800/mt. In spot markets, with liquidity tightening at the quarter’s end, cargo holders will be anxious to sell, but downstream producers will have little buying interest, leaving spot aluminum prices stagnant near RMB 14,500/mt. Spot discounts of RMB 60-100/mt are expected.