32% Chinese Aluminum Smelters See Aluminum Prices Fall This Week, SMM Survey

SHANGHAI, Jul. 26 (SMM) – SMM surveyed 44 Chinese aluminum smelters about their opinions over aluminum price outlook.

See SMM forecast, please click: Where Will LME Aluminum Head After 5-Day Losing Streak?

About 32% of them expect SHFE 1609 aluminum to fall below RMB 12,450/mt and LME aluminum below USD 1,600/mt, citing 4 reasons. First, many aluminum processors in Inner Mongolia and Henan shut down for rectifications because of environmental protection crackdowns, which will reduce aluminum demand. Second, July is the traditional off-season, with orders down significantly at aluminum processors. Third, output release from aluminum capacity restarted in April will add to market supply. Fourth, CFTC data showed net long positions of the US dollar hit one-year high. Strong dollar, plus weak crude oil, will pressure metals prices.  

Another 57% expect SHFE 1609 aluminum to stabilize at RMB 12,450-12,600/mt and LME aluminum at USD 1,600-1,620/mt. On the one hand, more aluminum ingots will arrive as railway shipments gradually return to normal, which will ease supply tightness. On the other hand, shorts are cautious about raising bearish bets. SHFE 1609 aluminum has found support at the 40-day moving average and met resistance at the 5-day moving average.   

The rest 11% are bullish that SHFE 1609 aluminum will rise to RMB 12,400/mt and LME aluminum at above USD 1,625/mt. Aluminum stocks in domestic five major markets fell to 267,000 mt as of July 24, pushing up SHFE aluminum and spot premiums. Spot premiums in east China expanded to RMB 180/mt on Monday from last Friday’s RMB 150/mt. Traders stockpiled goods actively. Besides, expectations for monetary easing in China will also favor metals prices.