SHFE 1708 Aluminum Jumps on Short Covering (2017-6-19)  

[SMM Morning Comment on Cast Aluminum Alloy: Cast Aluminum Consolidates at Highs, ADC12 Moves Sideways Amid Tug-of-War between Longs and Shorts] In the short term, ADC12 prices still face some downward pressure, but cost support remains, and prices are expected to mainly move sideways.

[Aluminum Inventory Buildup and Long-Term Capacity Commissioning; Geopolitical Premium Underpins Aluminum Price Rebound with Limited Room] Overall, the macro front has improved recently. The marginal constraint on the non-ferrous metals sector from expectations for US Fed interest rate hikes staying put has weakened. The proportion of liquid aluminum in China has continued to rise, and the geopolitical risk premium in the Middle East persists. These factors have jointly underpinned aluminum prices, and short-term market confidence has recovered somewhat. However, long-term aluminum capacity continues to come online outside China, traditional end-use demand in China remains weak during the traditional off-season, coupled with fluctuating expectations for US Fed interest rate hikes outside China and ongoing uncertainties in the Middle East geopolitical situation. Aluminum prices are expected to consolidate on a strong note, but upside resistance remains.