About Half of Chinese Aluminum Smelters See Aluminum Prices Rise This Week, SMM Survey

SHANGHAI, Apr. 12 (SMM) –About half of the 48 Chinese aluminum smelters surveyed by SMM expect aluminum prices to rise this week.

See SMM forecast, please click: Aluminum Prices to Lose Rising Strength This Week, SMM Says

Those optimists see SHFE 1606 aluminum rising to RMB 11,900-12,000/mt and LME aluminum advancing above USD 1,525/mt. China’s PPI rose 0.5% MoM in March, the first month-on-month rise since January 2014. A series of other Chinese economic data to be released later this week will be positive as well. Long buying was reported after last week’s technical correction. aluminum stocks in China’s five major markets fell 28,000 mt on a weekly basis last Thursday, will head for 400,000-500,000 mt, another positive factor for aluminum prices. 

Another 42% see SHFE 1606 aluminum stabilizing at RMB 11,650-11,850/mt and LME aluminum stabilizing at USD 1,500-1,525/mt. SHFE 1606 aluminum has met strong resistance at RMB 11,850/mt. Optimism over incoming Chinese economic data will offer support to aluminum prices. Downstream producers are discouraged by higher aluminum prices, while suppliers are unwilling to sell at lower prices. Alumina prices have been stable for two consecutive weeks. Some alumina producers are beginning to resume production or halt production cuts, which will leave little room for alumina prices to rise, in turn giving no upward momentum to aluminum prices.  

Only 8% are bearish that SHFE 1606 aluminum will fall below the 20-day moving average and LME aluminum will retreat from USD 1,505/mt. Opening of short positions by smelters for hedging purpose will put downward pressure on prices. Aluminum capacity restarts, though unlikely to contribute a lot to output H1, will give shorts reason to enter the market.