SHANGHAI, Jun. 24 (SMM) – Last Friday night, SHFE 1408 aluminum contract slipped to RMB 13,475/mt after starting at RMB 13,535/mt , and finished the night session at RMB 13,505/mt. Trading volumes totaled 35,770 lots, with positions off 2,150 lots to 136,276 lots. On Monday, HSBC’s flash China manufacturing PMI for June rose unexpectedly to 50.8, driving the most active contract up to RMB 13,550/mt. Finally, the light metal closed at RMB 13,510/mt. Trading volumes totaled 25,538 lots, with positions off 7,644 lots to 130,782 lots. 

Spot aluminum largely traded between RMB 13,360-13,370/mt in Shanghai and Wuxi on Monday, a discount of RMB 90-100/mt over SHFE 1407 aluminum contract. Mainstream traded prices were RMB 13,380-13,390/mt in Hangzhou. Sellers held offers firm, while downstream producers held to the sidelines. Traders showed high buying interest. In the afternoon, offers remained stable, with sparse transactions reported.

SMM surveyed 40 large aluminum smelters and traders in China.

75% of the market players surveyed are bullish that spot aluminum prices will rise above RMB 13,400/mt this week for two reasons. First, Chinese Premier Li Keiang’s confidence over the Chinese economy and upbeat flash HSBC’s China manufacturing PMI for June will drive the most active SHFE aluminum contract up to RMB 13,500-13,650/mt. Second, fewer aluminum ingot arriving will allow cargo holders to hold offers firm. 

The remaining 25% expect spot aluminum prices to remain stable between RMB 13,340-13,390/mt. On the supply side, shipments into China’s four major trading regions are limited, putting a floor under aluminum prices. On the demand side, rising prices will drive buyers away, preventing aluminum prices from rising.