SHANGHAI, Jul 4 (SMM) – SMM does not believe the rebound in Shanghai aluminium prices on Thursday July 4 to continue as weak fundamentals in a slow season will depress upward momentum in prices in the short term.
As a broad base metal rally improved market sentiment, the most-traded SHFE aluminium August contract rebounded from 13,620 yuan/mt, the lowest since March 11, during the night session of Wednesday July 3, and extended increase on Thursday July 4 to above the five-day moving average, ending up 0.92% at 13,775 yuan/mt.
Slow depletion in inventories of primary aluminium reinforced worries about slowing downstream consumption in a slack season of July-August, and this may weigh on prices.
Prices are likely to receive limited support from raw materials as an anticipated ramp-up in new, resumed alumina capacity will expand downside room in alumina prices, SMM believes.
A contango structure across SHFE July contract to March contract for the year 2020 pointed to expectations of consumption recovery in September-October.