SHFE And LME Aluminium Close With Gains, China’s Latest CPI And PPI Data Extends Decline

SHANGHAI, Jul 11 (SMM) –The most-traded SHFE 2308 aluminium contract opened at 17,945 yuan/mt overnight, with its low and high at 17,945 yuan/mt and 18,060 yuan/mt before closing at 18,045 yuan/mt. It rose by 55 yuan/mt or 0.31%. LME aluminium opened at $2,143.5/mt on Monday, with its low and high at $2,140.5/mt and $2,162.5/mt respectively before closing at $2154/mt, up $13/mt or 0.61%. 

When US Treasury Secretary Yellen visited China, the US stated that it does not seek to "decouple" from China. The decoupling of the world's top two economies will be disastrous for both countries and will also bring instability to the world; The CPI and PPI data released by China’s National Bureau of Statistics still pointed to decline. The market is in a state of obvious low inflation and is on the verge of deflation. In terms of fundamentals, the restarts of idled aluminium capacity in Yunnan Province will translate into greater supply pressure in late July. At the same time, there were rumours of power rationing in Sichuan. Aluminium ingot social inventory is expected to accumulate further as downstream consumption is in the off-season. In the short term, the resumption of aluminium production in Yunnan and weakening consumption margin will suppress aluminium prices, but low inventory on a year-on-year basis will keep SHFE front-month contract relatively resilient.

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