SHANGHAI, Aug. 19 (SMM) – Last Friday night, SHFE 1410 aluminum contract started lower at RMB 13,930/mt before going up to finish the night session at RMB 14,025/mt. Trading volumes totaled 49,892 lots, with positions up 4,102 lots to 131,648 lots.
On Monday, the most active contract hit a ceiling after touching at RMB 14,070/mt, and ended at RMB 14,025/mt. Trading volumes totaled 87,944 lots, with positions down 4,082 lots to 127,566 lots. The tense struggle between longs and shorts is expected to keep the light metal hovering around RMB 14,000/mt in the near term.
Spot aluminum largely traded at RMB 14,000-14,010/mt in Shanghai on Monday, a discount of RMB 20-30/mt over SHFE 1409 aluminum contract, versus RMB 14,040-14,050/mt in Wuxi and RMB 14,010-14,020/mt Hangzhou. Tight supply in Wuxi allowed local cargo holders to ask for higher prices. Sellers in other regions followed suit, holding offers firm above RMB 14,000/mt. Higher offers cooled buying. In the afternoon, sellers held offers unchanged even after SHFE 1409 aluminum fell, with few deals done.
SMM’s survey of 40 large aluminum smelters and traders in China reveals the following results:
40% of those surveyed are bullish that spot aluminum prices will rise above RMB 14,030/mt this week. First, LME aluminum is expected to rise to USD 2,010-2,050/mt as capital did not flow out. Second, the most active SHFE aluminum contract is poised to move higher to RMB 14,050-14,150/mt as investors did not close long positions aggressively. Third, falling aluminum stocks will encourage sellers to hold offers firm.
Another 50% see spot aluminum prices hovering around RMB 14,000/mt. First, LME aluminum and SHFE 1410 aluminum contract will meet resistance at the upper end, but have found support at the bottom, with prices expected between USD 1,970-2,010/mt and RMB 13,880-14,050/mt, respectively. Second, downstream consumption in domestic spot markets will remain stable.
The remaining 10% are worried that bearish technical indicators will send LME aluminum and the most active SHFE aluminum contract down. Spot aluminum prices are likely to fall below RMB 13,980/mt.