SHANGHAI, Apr. 9 (SMM) – SHFE 1406 aluminum contract slipped to RMB 13,090/mt in the morning session after opening at RMB 13,110/mt on Tuesday. The most active contract, however, rebounded in the afternoon, ending the day at RMB 13,130/mt. Trading volumes totaled 16,320 lots, and positions added 316 lots to 123,742 lots.

Spot aluminum largely traded at RMB 12,780-12,790/mt in Shanghai, Wuxi and Hangzhou on Tuesday. Cargo holders held offers firm. Traders stayed out of the market, while some downstream producers replenished stocks following the three-day holiday. In the afternoon, sellers hiked offers, but higher prices turned buyers away. 

SMM surveyed 40 large aluminum smelters and traders in China.

75% of market players are bullish that spot aluminum prices will rise above RMB 12,800/mt this week, with reasons below. First, Alcoa’s announcement of capacity cuts and a softer greenback will push LME aluminum up to near USD 1,880/mt. Second, the most active SHFE aluminum contract will likely rise further to RMB 13,200-13,400/mt as bearish sentiment is fading. Third, sellers in spot aluminum markets will hold prices firm now that delivery of SHFE 1404 aluminum contract is in the offing and traders will be interested in buying.

Another 15% see spot aluminum prices little changed between RMB 12,740-12,800/mt. 1. A weaker US dollar and disappointing US non-farm payrolls will keep LME aluminum in check within USD 1,800-1,850/mt. 2. SHFE 1406 aluminum contract has met resistance at the upper side, but has found support at the bottom, with prices expected between RMB 13,000-13,150/mt. 3. Cargo holders will not hike offers as SHFE aluminum has little upward momentum. 

The remaining 10% have painted a gloomy picture, believing that spot aluminum prices will fall below RMB 12,740/mt. First of all, LME aluminum will surrender gains since its KDJ indicator is pointing downward. Second, spot aluminum inventories in China remain high, which will drag prices down. Third, spot aluminum prices will face downward correction following two weeks of rises.