About 64% of Chinese Aluminum Smelters See Aluminum Prices Stabilizing This Week, SMM Survey

SHANGHAI, Mar. 1 (SMM) –About 64% of the 33 Chinese aluminum smelters surveyed by SMM expect aluminum prices to stabilize this week.

See SMM forecast, please click: LME Aluminum to Stay Highs Next Week

Those neutral smelters see SHFE 1605 aluminum at RMB 11,250-11,380/mt and LME aluminum at USD 1,550-1,575/mt. Aluminum consumption in east China is strong, but demand recovery is tepid in other markets. The divergence will keep market players cautious. Caution will also prevail before the upcoming NPC & CPPCC sessions. KDJ indicates that SHFE aluminum will have little upward momentum, while support at the 5-day moving average is strong.     

Another 27% are bullish that SHFE 1605 aluminum will climb to RMB 11,400-11,500/mt and that LME aluminum will rise above USD 1,580/mt, citing positive factors. 1. Trading in domestic spot market has become active, allowing spot discounts to narrow to RMB 50-60/mt. 2. Aluminum stocks in China’s major markets have grown more slowly. 3. Alumina prices keep rising on falling output, offering cost support to aluminum prices. 4. Moving averages of SHFE 1605 aluminum are pointing upward, reflecting market optimism.   

The rest 9% fear that SHFE 1605 aluminum will fall below RMB 11,250/mt and LME aluminum will fall below USD 1,550/mt, citing several negative factors. 1. Tumbling Chinese A-share market will take a toll on commodity market. 2. One aluminum smelter in put new aluminum capacity online, with output yielded at the end of February. 3. Some local governments will cut power tariffs for local aluminum smelters by RMB 0.1/Kwh, which will give some incentive to restart idled capacity. 4. The US dollar index stays high, weighing on LME aluminum.