SMM Aluminum Weekly Price Review and Forecast (29 Jul. – 2 Aug. 2013)

SHANGHAI, Jul. 29 (SMM) –Prices of the most active SHFE aluminum contracts moved within a tight range of RMB 14,350-14,450/mt last week. Trading volumes and positions both fell as shorts and longs pulled out of the market.

The end-of-month liquidity crunch left cargo holders in a rush to sell. However, buying interest among downstream producers and middlemen diminished. This pulled spot aluminum prices in Shanghai down to RMB 14,340/mt, with spot discount expanding to RMB 30/mt over SHFE 1308 aluminum contract prices. Aluminum stocks in Guangdong have been low at around 80,000 mt, helping the region’s spot aluminum prices hold stable at RMB 14,640-14,700/mt, a premium of RMB 300/mt over Shanghai. 

The final global manufacturing PMI for July and US July non-farm employment figures will be released in the coming week. Results are expected to be mixed, which will keep light metal prices in a narrow range, with LME aluminum prices holding stable at USD 1,800/mt, and with prices for the most active SHFE aluminum contracts meeting resistance at RMB 14,400/mt. Spot aluminum consumption will be sluggish due to tight liquidity, so spot discounts of RMB 30/mt are expected over SHFE current-month aluminum contracts.