36% Chinese Aluminum Smelters See Aluminum Prices Rise This Week, SMM Survey

SHANGHAI, Jul. 5 (SMM) – SMM surveyed 37 Chinese aluminum smelters about their opinions over aluminum price outlook.

See SMM forecast, please click: LME Aluminum to Extend Gains Next Week, SMM Expects

About 36% of them expect SHFE 1609 aluminum to hold firm above RMB 12,600/mt and LME aluminum return above USD 1,665/mt, citing several factors. First, Chinese yuan’s big depreciation following Brexit vote allowed domestic metals to rise significantly, with nickel and silver once hitting daily upside limits. Bullish sentiment will allow SHFE aluminum to rise further. Second, manufacturing PMIs for June from the UK, Germany and France were positive. Third, worker strike threat in Norway and crisis in Venezuela will favor crude oil prices. Fourth, the US dollar index will face further downward corrections. 

Another 36% expect SHFE 1609 aluminum to fluctuate at RMB 12,400-12,600/mt and LME aluminum move at USD 1,645-1,665/mt for several reasons. First, spot premiums in east China market expanded markedly on Monday due to low aluminum stocks, which will support SHFE aluminum. Second, both shorts and longs entered when SHFE aluminum rose to recent highs. The intense game between shorts and longs will leave SHFE aluminum fluctuating in current range.   

The 28%% are bearish that SHFE 1609 aluminum will fall below RMB 12,400/mt and LME aluminum will drop below the 5-day moving average. First, technical side suggests downward corrections on the way for SHFE aluminum. Second, demand will weaken further in the off-season. Third, shipments from northwest China will recover with weather turning better. Aluminum stocks in domestic five major markets rose slightly on Monday compared with last Thursday.