SMM Aluminum Market Daily Review (2015-9-14)

SHANGHAI, Sept. 15 (SMM) –SHFE 1511 aluminum rose to RMB 12,055/mt in morning session due to exit of shorts, but fell to RMB 11,980/mt in the afternoon due to exit of longs. Finally, the most active contract ended down RMB 35/mt or 0.29% at RMB 12,010/mt. Trading volumes were up 738 lots to 25,476 lots, and positions were down 1,360 lots to 116,000 lots.

Aluminum prices were mainly between RMB 11,880-11,890/mt in Shanghai on Monday, discounts of RMB 50-40/mt over SHFE 1509 aluminum, versus RMB 11,870-11,900/mt in Wuxi and RMB 11,870-11,890/mt in Hangzhou. Processors began stockpiling cargos for upcoming Chinese National Day holiday. This, plus nearing delivery of SHFE 1509 contract, left trading activity brisk. Suppliers thus hiked offers.  

SMM’s latest survey of 38 large aluminum smelters, traders and processors in China reveals the following results:  

53% of them expect aluminum prices to stabilize this week: USD 1,620-1,640/mt for LME aluminum and RMB 11,950-12,050/mt for SHFE 1511 aluminum. They expect strong caution before the US Fed’s policy meeting to keep the light metal in check. SHFE 1511 aluminum has found support at short-term moving averages while meeting resistance at long-term moving averages. LME aluminum is now near the upper end of Bollinger Bands, implying that resistance will be strong at the upper end. 

Another 26% see an uptick: LME aluminum will rise above USD 1,640/mt, and SHFE 1511 aluminum will climb above RMB 12,050/mt. They cited a series of positive factors: advance stock building before the upcoming Chinese National Day holiday (Oct. 1-7), smelters holding back goods, recent production cuts, as well as slim chance of US rate hike this September. 

The rest 21% are bearish. LME aluminum might fall below USD 1,620/mt, and SHFE 1511 aluminum contract might fall below RMB 11,950/mt. They noted that the scale of new capacity has exceeded that of idled capacity and downstream consumption this year is weaker than last year. SHFE aluminum has shown signs of loss of upward momentum, and LME aluminum will face downward correction after sharp gains.