SHANGHAI, May 26 (SMM) –SHFE 1507 aluminum contract was range-bound on Monday in the absence of guidance from LME aluminum. The contract inched down to RMB 13,170/mt at the tail of the day before ending at RMB 13,180/mt. Trading volumes totaled 18,972 lots, and positions were down 4,652 to 103,968.
Spot aluminum largely traded between RMB 13,000-13,020/mt in Shanghai on Monday, discounts of RMB 120-140/mt over SHFE 1506 aluminum contract, versus RMB 13,000-13,020/mt in Wuxi, and RMB 13,040-13,050/mt in Hangzhou. Some sellers rushed to sell against a pileup of inventories, sending prices down. Lower prices stoked buying interest. In the afternoon, few deals were reported.
SMM surveyed 30 large aluminum smelters and traders in China.
40% of them expect prices to stabilize this week: LME aluminum should consolidate between USD 1,750-1,790/mt. SHFE 1508 aluminum contract will range RMB 13,150-13,250/mt, with bears cautious about entering. Some traders have few goods on hand after just finishing delivery under term contracts. Hedged goods will not flow into spot market in large amount. This will allow spot aluminum in domestic market to stabilize at RMB 13,000-13,040/mt.
The rest 60% are bearish: a strong US dollar and growing bearishness will send LME aluminum down to USD 1,745-1,775/mt. SHFE 1508 aluminum contract has found no support and technical indicators are negative, so prices might fall to RMB 13,100-13,200/mt. In domestic spot market, processors did not purchase in large amount after prices fell to RMB 13,000/mt, suggesting that buyers lack confidence over near-term prices. Spot aluminum might fall below RMB 13,000/mt.