SHANGHAI, Jun. 25 (SMM) – Investors pulled out of financial markets against liquidity crunch in China at the end of mid-year. As a consequence, China’s A-shares plummeted 5.3% on Monday, and gloomy outlook for demand in China added to market worries. Meanwhile, LME aluminum inventories broke through 5.44 million mt to a new record high. Shorts dominated the market during the European session, sending LME aluminum down to USD 1,762.5/mt, a four-year low. Finally, LME aluminum closed at USD 1,770/mt, down USD 25/mt or 1.39% and ending in negative territory for twelve days in a row. LME aluminum inventories increased 6,375 mt to 5,440,325 mt, and positions soared 10,627 lots to 760,086 lots.
Liquidity crunch in China will continue to dampen market sentiment. LME aluminum should inch down to test support at USD 1,750/mt and move within USD 1,750-1,790/mt on Tuesday. The most active SHFE aluminum contract is expected to open lower at RMB 14,250/mt, with prices between RMB 14,200-14,300/mt. In spot market, supply will exceed demand, with spot discount of RMB 10-50 expected over SHFE 1307 aluminum contract prices.