SHANGHAI, Apr. 6 (SMM) –About 51% of the 45 Chinese aluminum smelters surveyed by SMM expect aluminum prices to rise this week.
See SMM forecast, please click: Aluminum to Remain Only Bright Spot among Base Metals Next Week, SMM Says
Those optimists see SHFE 1606 aluminum rising above RMB 12,000/mt and LME aluminum advancing above USD 1,550/mt. First, aluminum stocks in China’s five major markets fell sharply. It will take only about six weeks for aluminum stocks China’s five major markets to drop to 400,000-500,000 mt at current destocking pace. Aluminum prices used to get support when stocks fell to 400,000-500,000 mt during 2013-2015, and this year will be no exception. Second, improved downstream consumption and Chinese macro economic data will also bode well for aluminum prices. Third, technical side is positive for SHFE aluminum.
Another 38% see SHFE 1606 aluminum stabilizing at RMB 11,800-11,950/mt and LME aluminum stabilizing at USD 1,530-1,545/mt. First, many smelters and speculators will open short positions for hedging purpose once SHFE aluminum nears RMB 12,000/mt mark. Second, brisk trading in spot market will support SHFE aluminum at the 20-day moving average. Third, alumina prices stopped falling, easing cost pressure at aluminum smelters and thus offering no upward momentum to aluminum prices.
Only 11% are bearish that SHFE 1606 aluminum will fall below the 5-day moving average and LME aluminum will retreat from the 20-day moving average. Upcoming oil output freeze meeting will be all but symbolic without participation of Iran. As such, crude oil prices will find no support, boding ill for LME aluminum. Some Chinese aluminum smelters are planning to resume production, another negative factor.
