SHFE 1710 Aluminum Falls Back after Initial Rise (2017-8-16)

SHANGHAI, Aug. 16 (SMM) – SHFE 1710 aluminum opened at RMB 15,890/mt on Wednesday. The contract rose to RMB 16,165/mt on long buying before falling back. In the afternoon, prices rose again to RMB 16,215/mt, but then fell back as longs took profit, and finally ended at RMB 16,100/mt. Trading volumes rose to 581,182 lots, and positions rose 808 lots to 399,856 lots. 

Given expectations for output cuts during winter heating season, longs still take the upper hand. However, new longs are cautious about entering due uncertainty over output cuts. SHFE 1710 aluminum will challenge RMB 16,215/mt tonight. Environmental issue in Shanxi is affecting local bauxite and alumina industry. Some local alumina producers have cut or halted production due to bauxite shortage. So, alumina prices will probably rise. But, the rise in alumina costs will offer little boost to aluminum prices, considering that profit has exceeded RMB 2,000/mt at smelters.