SHANGHAI, Dec. 15 (SMM) –43% of the 42 Chinese aluminum smelters surveyed by SMM are bullish toward this week’s aluminum prices.

Another 33% expect prices to stabilize, while the rest 24% paint a gloomy picture.  

See SMM forecast, please click: SHFE Aluminum to Continue Outperforming LME Aluminum on Massive Output Cut Plan

The optimists expect LME aluminum to rise above USD 1,500/mt and SHFE 1602 aluminum to climb above RMB 10,800/mt. Aluminum production cuts in China are yielding result, as reflected in decline of aluminum stocks in China’s five major trading markets to around 810,000 mt. Tight supply in spot market will trigger a short squeeze. Most smelters will not open short positions for hedging purpose at current price level, as they expect prices to rise further. 

Those neutralists see SHFE 1602 aluminum meeting resistance at the 60-day moving average, arguing that longs will be cautious about entering. On the other hand, production cuts in China will put a floor under prices.  

The rest fear that LME aluminum will fall below USD 1,470/mt and SHFE 1602 aluminum will drop below RMB 10,500/mt, citing poor demand outlook and eagerness to sell against tight cash at year’s end. Moreover, falling alumina prices have helped narrow the share of loss-making aluminum capacity, weakening cost support for aluminum prices.