SHANGHAI, May 24 (SMM) – SMM surveyed 40 Chinese aluminum smelters about their opinions over aluminum price outlook.
See SMM forecast, please click:LME and SHFE Aluminum to Embark Diverging Paths Next Week
About 60% of them see SHFE 1607 aluminum stabilizing at RMB 12,250-12,500/mt and LME aluminum consolidating at USD 1,530-1,550/mt. On the technical side, the 10-day moving average will offer support, while the 20-day moving average will pose resistance. Investors are rolling positions to SHFE 1608 aluminum contracts, which will reduce price volatility on SHFE 1607 aluminum. Besides, stable alumina prices will also give aluminum prices no reason to rise or fall
Another 25% are bearish that SHFE 1607 aluminum will fall below the 10-day moving average and LME aluminum will fall below USD 1,530/mt. First, panic ruled the market after ferrous metals prices hit daily downside limit on Monday. Second, downstream consumption has softened in Wuxi after entering May. Some aluminum processors there said orders fell in May and said customers are not in a hurry to ask them to fulfill orders. Warehouse withdrawals dropped in Wuxi compared with April. Third, despite mixed US economic data, weak Japanese yen and euro zone will keep the US dollar strong.
Only 15% are bullish that SHFE 1607 aluminum will rise above RMB 12,500/mt and LME aluminum will rise above USD 1,550/mt. First, firm spot aluminum prices will offer momentum to SHFE aluminum. Spot premiums in east China have been RMB 20-30/mt over SHFE 1606 aluminum recently. Spot premiums will last due to tight supply. Premiums in Guangdong over Shanghai remained above RMB 200/mt. Second, combined aluminum stocks in Shanghai, Wuxi and Guangdong on Monday fell 25,000 mt from last Thursday as fewer goods arrived this past weekend. Aluminum stocks in China’s five major markets fell to near 530,000 mt last Thursday.