Forecast For Jun 13-July 12: Weakening Consumption And Expectations For Production Resumptions In Yunnan To Weigh On Aluminium Prices

SHANGHAI, Jun 14 (SMM) – There were growing expectations for US Fed to pause interest rate hikes. Market sentiment improved after US debt crisis was resolved. China’s May PPI, CPI, import and export data soured market sentiment. Major Chinese banks lowered deposit rates. Market is expecting economic stimulus policies. Fundamentals: The operating aluminium capacity in China will continue to grow in June, sparking fears of oversupply in the third quarter. Some aluminium capacity in Yunnan may be resumed in late June as hydropower supply has picked up, but the nearly 2 million mt of idled capacity in the province is unlikely to be fully restarted in the short term. Downstream demand will remain sluggish in June due to the off-season, except for slight growth in automotive and PV extrusion. Aluminium billet conversion margins kept falling amid poor demand, which may force billet plants to cut output, hurting demand for molten aluminium.  Growing supply and sluggish consumption will prevent aluminium prices from rising, but low inventories will support aluminium prices. The most-traded SHFE aluminium contract is expected to move between 17,300-18,800 yuan/mt in June 13-July 12.

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