SMM Aluminum Market Daily Review (2015-4-20)

SHANGHAI, Apr. 21 (SMM) - Last Friday night, SHFE 1506 aluminum contract inched up to RMB 13,210/mt after starting at RMB 13,205/mt. The most active contract ended the night session at RMB 13,175/mt. Trading volumes totaled 6,132 lots, with positions down 792 to 113,088.

 

 

Despite China’s RRR cuts, SHFE aluminum drew no support. On Monday, the most active contract fell to RMB 13,070/mt before closing at RMB 13,100/mt. Trading volumes totaled 31,388 lots, with positions up 1,376 to 115,256.

 

SHFE 1505 aluminum contract drifted lower to RMB 13,100/mt on Monday. Spot aluminum largely traded between RMB 13,000-13,010/mt in Shanghai, discounts of RMB 100-110/mt over SHFE 1505 aluminum contract, versus RMB 12,980-13,010/mt in Wuxi, and RMB 13,030-13,060/mt in Hangzhou. Processors and traders showed little buying interest, sending prices down. In the afternoon, some traders went bargain hunting. 

  

SMM surveyed 35 large aluminum smelters and traders in China. 

 

17% of them are bullish over aluminum prices this week: (i) a softer greenback and rising crude oil will drive LME aluminum up above USD 1,830/mt; (ii) rising LME aluminum and crude oil should push the most active SHFE aluminum contract up above RMB 13,250/mt; (iii) in domestic spot market, spot discounts did not expand further, suggesting that cargo holders are unwilling to sell at lower prices. Spot aluminum should rise above RMB 13,030/mt. 

 

Another 26% are bearish: (i) LME aluminum is in “overbought territory”, meaning that prices might fall below USD 1,810/mt; (ii) negative technical indicator will weigh the most active SHFE aluminum contract down to RMB 13,000-13,100/mt; (iii) in domestic spot market, growing inventories and sluggish downstream consumption will drag prices down below RMB 12,980/mt. 

 

The rest 57% expect prices to stabilize: (i) LME aluminum should move between USD 1,810-1,830/mt; (ii) the most active SHFE aluminum contract has found solid support at RMB 13,000/mt, but a lack of positive news will prevent prices from rising, with prices expected between RMB 13,100-13,250/mt; (iii) in domestic spot market, suppliers will hold back goods at low prices, while buyers will show little interest, with spot prices expected between RMB 12,980-13,030/mt.