SHFE Aluminum to Edge Higher after Holiday (2017-10-09)

Aluminium Ingot January Production Analysis & February Forecast

According to SMM's research findings, Yunnan Province is currently experiencing a dry season, with hydropower contribution remaining at a relatively low level. Enterprises have no immediate plans for production resumption and await clearer policy guidance from the power sector.

The implementation of Indonesia's ban on bauxite exports since June last year has led to bauxite surplus, brought challenges to consume domestically as the Indonesia's alumina plants have limited capacity. Ronald Sulistyanto, Chairman of the Indonesian Bauxite and Iron Ore Entrepreneurs Association (Asosiasi Pengusaha Bauksit dan Bijih Besi Indonesia - APB3I), highlighted the struggle to secure external investment for alumina plant projects, while some entrepreneurs are forced to cut costs or halt production. However, there is hope for relief through potential relaxation of the export ban policy. Efforts are underway to boost alumina production capacity, although challenges persist in addressing the surplus bauxite issue.

On Tuesday, LME aluminum is expected to lurch higher, with price between USD 2,160-2,185/mt.

SMM expects aluminum to hover at highs in the short term, and eyes should be on its support at the 5-day moving average.  

LME aluminum will trade at USD 2,005-2,035/mt on Thursday, and SHFE 1710 aluminum will regain losses seen on Wednesday’s night trading, with price estimated at RMB 16,000-16,250/mt. 

On Wednesday’s night trading, the dollar stopped falling, but a weak dollar is expected to be remain, and base metals will keep fluctuating.

Prebaked anode prices in China’s domestic market rose by about 620 yuan per tonne in January 2017 after Shandong Weiqiao raised its procurement price. 

Base metal prices on the SHFE are expected to diverge on Friday, Shanghai Metals Market foresees. 

Base metal prices on the SHFE are expected to be volatile on Thursday, Shanghai Metals Market foresees.