SHANGHAI, Mar. 26 (SMM) – SHFE aluminum has performed much better than LME aluminum this past week and even hit nearly 6-month high. What was behind the spike and will the momentum carry on into this coming week?
Tightening supply in China remains the major driver, as reflected by over 60,000 tonne decline in aluminum stocks in major markets. The supply side will continue favoring prices of the light metal. SHFE 1605 aluminum, the most active one, is poised to head for 12,000 yuan per tonne, SMM predicts.
LME aluminum, on the other hand, will find technical support and the strategy of buying LME aluminum while selling SHFE aluminum for arbitrage will also put a floor. SMM sees LME aluminum at $1,470-1,500 per tonne.
Destocking in Chinese aluminum market will help spot discounts stabilize at 30-60 yuan per tonne.
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