SHANGHAI, Apr. 15 (SMM) – On last Friday night, SHFE 1406 aluminum contract hovered above the 5-day moving average after starting at RMB 13,210/mt, and finished the night session at RMB 13,215/mt. Trading volumes totaled 13,008 lots, and positions added 98 lots to 127,260 lots. On Monday, the most active contract moved sideways for most of the day, but rose as the closing bell approached to close the day up RMB 10/mt at RMB 13,235/mt. Trading volumes during the daytime hours totaled 14,434 lots, and positions decreased 3,036 lots to 124,224 lots. The light metal should continue to test resistance at the 60-day moving average for the near term.
Spot aluminum largely traded at RMB 12,940-12,950/mt in Shanghai, RMB 12,940-12,960/mt in Wuxi, and RMB 12,950-12,960/mt in Hangzhou on Monday. Trading was bleak as bullish sentiment is growing. In the afternoon, rising SHFE aluminum lured buyers in, but sellers held back goods in hopes of higher prices at sight.
SMM surveyed 38 large aluminum smelters and traders in China.
58% of the market players surveyed are bullish that spot aluminum prices will rise above RMB 13,000/mt this week, with reasons below. First, recently released US initial jobless claims, consumer sentiment index and PPI were all positive, which will push LME aluminum up to USD 1,860-1,920/mt. Second, with bearish sentiment fading, the most active SHFE aluminum contract looks set to move higher to RMB 13,250-13,350/mt. Third, traders and downstream producers are more willing to buy, also offering upward momentum to spot aluminum prices.
Another 37% see spot aluminum prices little changed between RMB 12,940-13,000/mt. First, LME aluminum will likely fluctuate in a tight USD 1,860-1,900/m band. Second, SHFE 1406 aluminum contract has met strong resistance at the 60-day moving average, but has also found strong support at the bottom, with prices expected between RMB 13,150-13,250/mt. Third, downstream producers are reluctant to jump in at current high prices.
The remaining 5% have pained a dismal picture of this week’s spot aluminum prices, worrying that prices will fail to hold onto RMB 12,940/mt mark. First, a stronger greenback and deteriorating Ukraine crisis will weigh LME aluminum down to USD 1,810-1,860/mt. Second, traders will become anxious to sell at highs, which will add to oversupply pressure. Third, downstream producers will show little buying interest.