SMM Aluminum Weekly Price Review and Forecast (May 26-30, 2014)

SHANGHAI, May 26 (SMM) – SHFE 1407 aluminum contract prices moved in a narrow range early last week before rising to RMB 13,130/mt on strong manufacturing PMI for China. Prices for the most active contract followed rising LME aluminum prices up further later in the week and rose above the 10-day moving average. In China’s physical markets, sellers held prices firm, while buyers stayed on the sidelines. Demand remained soft after prices fell below RMB 13,000/mt and did not pick up until the second half of the week.    

This coming week, LME aluminum prices should fluctuate below USD 1,800/mt for the first half of the week, but will move higher in the second half of the week since both KDJ and MACD indicators are pointing upward and since a series of economic reports will be released. Prices are expected between USD 1,770-1,820/mt. Prices for the most active SHFE aluminum contract should gain less than LME aluminum prices and move in a RMB 13,100-13,270/mt range. In China’s spot markets, tightening cash flows at the month’s end will undermine buying interest, leaving spot discounts at RMB 40-90/mt over SHFE 1406 aluminum contracts.