SHANGHAI, Apr. 29 (SMM) – Last Friday night, SHFE 1407 aluminum contract slipped to RMB 13,500/mt after starting at RMB 13,570/mt, and finished the night session at RMB 13,540/mt. Trading volumes totaled 17,268 lots, and positions contracted 298 lots to 116,516 lots. On Monday, the most active contract erased gains after a brief foray into RMB 13,615/mt, ending the day at RMB 13,535/mt. Trading volumes totaled 32,134 lots, and positions shrank 768 lots to 115,748 lots.
Spot aluminum largely traded at RMB 13,430-13,440/mt in Shanghai, RMB 13,440-13,460/mt in Wuxi, and RMB 13,440-13,500/mt in Hangzhou on Monday. Cargo holders were eager to sell at highs, but buyers in general stayed out of the market. In the afternoon, sellers cut offers to RMB 13,410-13,420/mt, with few deals completed.
SMM surveyed 42 large aluminum smelters and traders in China.
48% of the market players are optimistic that spot aluminum prices will climb above RMB 13,500/mt this week. First, LME aluminum looks set to move higher to USD 1,850-1,900/mt and SHFE 1407 aluminum contract will also advance to RMB 13,500-13,800/mt on dip-buying. Second, traders will show high buying interest out of bullishness and downstream producers increase raw material purchases ahead of the upcoming three-day holiday.
Another 38% see spot aluminum prices little changed between RMB 13,420-13,500/mt. First, the most active SHFE aluminum contract will face correction following sharp rises, with prices expected to hover narrowly above RMB 13,500/mt. Second, demand in spot aluminum markets will wane since most downstream producers finished stock buildup a week ago.
The remaining 14% are worried that spot aluminum prices may retreat below RMB 13,420/mt. First, the KDJ indicator of LME aluminum is pointing downward and tensions over the Ukraine crisis has escalated, so LME aluminum may move lower to USD 1,830-1,870/mt. Second, SHFE 1407 aluminum contract will fall back to RMB 13,400-13,500/mt as investors will book profits at highs. Third, sellers in physical markets will be anxious to liquidate inventories ahead of the May Day holiday, compounding oversupply pressure.