SMM Aluminum Weekly Price Review and Forecast (Mar. 3-7, 2014)

SHANGHAI, Mar. 3 (SMM) – Early last week, SHFE 1405 aluminum contract prices fell along with the Shanghai Composite Index to RMB 13,310/mt in response to the People’s Bank of China’s (PBOC)’s repurchase operations, as well as tightening credit availability for mortgages. Prices for the most active contract, however, rebounded to near RMB 13,400/mt later in the week. 24,532 lots were traded during last week, and positions added 7,740 lots to 92,684 lots. In China’s spot markets, spot aluminum prices fell below RMB 13,000/mt early last week. Cargo holders became less anxious to sell after SHFE aluminum prices rebounded. Downstream producers did not purchase in large amounts, but traders showed greater interest in buying.     

On the technical side, LME aluminum prices should face downward pressure this week and fluctuate in a USD 1,700-1,770/mt band. Prices for the most active SHFE aluminum contracts were relatively stable after recent sharp declines, but lacked any upward momentum, so investors may take profits at current highs. In this context, prices should move between RMB 13,300-13,500/mt. In China’s spot markets, spot aluminum prices are showing signs of an upturn. Suppliers will be in no rush to sell, and downstream producers are expected to increase raw material purchases due to the arrival of the high-demand season in March, as well as from increased liquidity at the start of the new month. This improved demand will help spot discounts over SHFE 1403 aluminum contract prices narrow to RMB 150-250/mt.