About 51% of Chinese Aluminum Smelters Bearish toward Aluminum Prices This Week, SMM Survey

SHANGHAI, Feb. 2 (SMM) –About 51% of the 35 Chinese aluminum smelters surveyed by SMM see aluminum prices fall this week.

See SMM forecast, please click: LME Aluminum Poised for Gains Next Week

These pessimists expect SHFE 1604 aluminum to fall below RMB 10,600/mt and LME aluminum to fall below USD 1,500/mt. First, spot discounts in domestic spot market have expanded, due to cooling downstream consumption as the holiday nears and stocks in trading markets are beginning to rise. Second, China’s manufacturing PMI remained negative in January. Third, short selling pressure remains strong at highs. Fourth, the US dollar index remains high. 

Another 35% see SHFE 1604 aluminum hovering around RMB 10,600/mt. Investors will be cautious about entering out of risk aversion ahead of the 2016 Chinese New Year holiday in early February. 

The rest 14% are bullish that LME aluminum will rise to USD 1,520-1,540/mt and SHFE 1604 aluminum will climb above RMB 10,700/mt. Aluminum stocks in China’s major trading markets will grow slower during this year’s Chinese New Year holiday than in the same period last year. This will give some investors reason to open long positions before the holiday.