SHANGHAI, Jul. 9 (SMM) – SHFE 1310 aluminum contract opened lower at RMB 14,200/mt on Monday. SHFE three-month aluminum contract gave back gains immediately after climbing to RMB 14,250/mt, and finally ended the day at RMB 14,200/mt, down RMB 95/mt or 0.66%. Shorts increased positions out of pessimism over upcoming Chinese economic indicators for June. Trading volumes added 5,644 lots to 19,348 lots, and positions also increased 6,434 lots to 216,122 lots. SHFE aluminum for October delivery is expected to meet resistance at RMB 14,300/mt.
Mainstream traded prices for spot aluminum in Shanghai were RMB 14,340-14,350/mt on Monday, a premium of RMB 0-10/mt over SHFE 1307 aluminum contract prices. Low-iron aluminum was traded around RMB 14,500/mt. Prices for the most active SHFE aluminum contract plunged, driving spot aluminum down below RMB 14,400/mt. Traders largely held offers firm at RMB 14,350/mt, but downstream producers were cautious about buying. Trading was modest at RMB 14,340/mt. In the afternoon, spot aluminum market turned quiet, with quotations level with those in the morning.
SMM aluminum price averaged RMB 14,350/mt on Monday, down from last week’s RMB 14,424/mt. SMM surveyed 38 aluminum ingot producers and traders on their forecasts for this week’s aluminum prices.
63% of the market players anticipate little changes in aluminum prices. First, although the US dollar index hit a three-year high, sustainable recovery in the US economy will ease market pessimism. Second, aluminum stocks in China are still under downward track, which will lend support to aluminum prices. Third, the fact that aluminum prices have long been below cost levels will also help aluminum prices resist declines. As such, LME aluminum will consolidate at USD 1,760/mt, while the most active SHFE aluminum contract will hover between RMB 14,200-14,300/mt. Spot aluminum will stagnate at RMB 14,350/mt.
The remaining 37% expect aluminum prices to drop this week. First, summer is an off-season for aluminum industry. Second, slowdown in Chinese economy will eat into downstream demand. Third, a firm US dollar will weigh down commodity prices. In this context, LME aluminum will retreat from USD 1,750/mt, and SHFE 1310 aluminum contract will hardly hold onto RMB 14,200/mt. Spot aluminum may inch down to RMB 14,300/mt.