SMM Aluminum Market Daily Review (2015-1-26)

SHANGHAI, Jan. 27 (SMM) –Last Friday night, SHFE 1503 aluminum contract was range-bound after starting at RMB 12,790/mt, and finished the night session at RMB 12,785/mt. Trading volumes totaled 8,102 lots, with positions down 610 to 121,810.

 

SHFE 1504 aluminum contract became the most active one on Monday. The contract fell to RMB 12,765/mt as market panicked after SHFE copper hit daily downside limit. However, the metal rebounded later to close at RMB 12,825/mt. Trading volumes totaled 33,432 lots, with positions up 4,892 to 123,432.  

 

Spot aluminum largely traded between RMB 12,660-12,670/mt in Shanghai on Monday, discounts of RMB 30-60/mt over SHFE 1502 aluminum contract, versus RMB 12,660-12,680/mt in Wuxi and Hangzhou. Growing willingness to sell and falling SHFE aluminum weighed spot pricesdown. Traders were active in the market. In the afternoon, a few deals were reported.  

 

SMM surveyed 35 large aluminum smelters and traders in China. 

 

43% of them expect aluminum prices to hold stable this week: (i) LME aluminum has found solid support at USD 1,800/mt. The US Fed is expected to remain dovish, which will keep LME aluminum stable between USD 1,800-1,850/mt; (ii) the most active SHFE aluminum contract should consolidate between RMB 12,800-12,900/mt; (iii) in domestic spot market, slow growth in inventories will allow spot prices to stabilize between RMB 12,630-12,680/mt.  

 

The remaining 57% are bearish: (i) a firm dollar may weigh weigh LME aluminum down to USD 1,770-1,820/mt; (ii) negative technical side and lingering bearish sentiment would send the most active SHFE aluminum contract down below RMB 12,800/mt; (iii) in domestic spot market, sellers will remain keen to move goods, while downstream consumption will fall, which will cause spot aluminum to drop below RMB 12,630/mt.