[Al Price] SMM Aluminum Market Daily Review (2015-7-27)

SHANGHAI, Jul. 28 (SMM) –SHFE 1510 aluminum contract touched an intraday low of RMB 12,240/mt on Monday. The most active contract ended down RMB 35/mt or 0.29% at RMB 12,245/mt. Trading volumes were down 6,914 lots to 22,660 lots, and positions were down 664 lots to 145,880 lots. Investors cut bullish bets near close of the day.

Aluminum prices were mainly between RMB 12,140-12,150/mt in Shanghai on Monday, discounts of RMB 100-110/mt over August aluminum on the SHFE, versus RMB 12,120-12,150/mt in Wuxi and RMB 12,140-12,150/mt in Hangzhou. Traders actively hunted for cheap goods gained early in the morning, while processors remained little interested in building stocks. In the afternoon, sellers held back goods after SHFE aluminum fell. 

SMM surveyed 30 large aluminum smelters and traders in China. 

13% of them are bullish over this week’s aluminum prices, citing a series of positive factors: aluminum smelter production cuts in China; falling aluminum stocks in China’s major regional markets; unwillingness to sell against losses. They expect LME aluminum to rise above USD 1,650/mt, SHFE 1510 aluminum contract to climb above RMB 12,250/mt and spot aluminum to return above RMB 12,350/mt. 

Another 47% see little change in aluminum prices. They understand that positive impact from aluminum smelter production cuts will be offset by sluggish downstream consumption. So, LME aluminum should hold stable at USD 1,635-1,650/mt, RMB 12,250-12,350/mt for SHFE 1510 aluminum contract, and RMB 12,150-12,200/mt and spot aluminum.  

The rest 40% are bearish. Despite production cutbacks, overall supply remains plentiful. Weak demand in the off-season will pressure spot prices. That said, spot prices are unlikely to fall below RMB 12,000/mt since more smelters will cut output once prices fall below that level. LME aluminum should fall below USD 1,635/mt, SHFE 1510 aluminum contract should drop below RMB 12,250/mt, and spot aluminum in domestic market might decline below RMB 12,100/mt.