SMM Aluminum Weekly Price Review and Forecast (Apr. 28-30, 2014)

SHANGHAI, Apr. 28 (SMM) – SHFE 1407 aluminum contracts switched to the most active contract last Tuesday and prices rose to RMB 13,725/mt on strong bullish sentiment, with positions and trading volumes both up significantly. In China’s physical markets, sellers and buyers watched from the sidelines early in the week as SHFE aluminum prices were little changed, but cargo holders raised offers after SHFE aluminum prices rose sharply, with prices gaining more than RMB 100/mt for two consecutive days. Rising prices gave traders strong incentives to buy, but downstream producers were forced to purchase at high prices. Trading was brisk.    

Markets will stay cautious ahead of the release of minutes from the latest US Federal Reserve policy meeting, as well as the release of the US non-farm employment report for April. In this context, LME aluminum should fluctuate this week in a USD 1,870-1,920/mt range, while SHFE 1407 aluminum contract prices should move between RMB 13,500-13,800/mt, and with investors likely to book profits at highs. In China’s spot markets, downstream producers will increase raw material purchases ahead of the May Day holiday, helping cut spot discounts to less than RMB 100/mt over SHFE 1405 aluminum contracts.