SHANGHAI, May 18 (SMM) –Positive impact from China’s interest rate cut was offset by a raft of discouraging Chinese economic data, including fixed asset investment, industrial output, retail sales and M2 growth. The exit of bulls drove SHFE 1507 aluminum contract down from above RMB 13,400/mt to RMB 13,270/mt. In China’s spot market, suppliers held back after spot prices fell to around RMB 13,000/mt. Traders and processors entered the market at such low prices, allowing spot discounts to narrow. However, traders lost buying interest after spot discounts shrank to about RMB 100/mt.
Recent Chinese economic data are negative, and it takes time for the PBOC’s interest rate cut to yield fruit. In this context, SHFE 1507 aluminum contract should move between RMB 13,250-13,400/mt. In China’s spot market, spot discounts will widen slightly after SHFE 1506 aluminum contract shifts to the new front-month contract. Spot aluminum should trade at discounts of RMB 150-200/mt over SHFE front-month contract.