Macro Headwinds and Poor Fundamentals to Expose Aluminium Prices to Downside Risks

SHANGHAI, May 22 (SMM) – The most-traded SHFE 2306 aluminium contract opened at 18,530 yuan/mt at last Friday’s night session, with its low and high at 18,350 yuan/mt and 18,560 yuan/mt before closing at 18,350 yuan/mt, down 100 yuan/mt or 0.54%. LME aluminium opened at $2,288/mt last Friday, with its low and high at $2,284/mt and $2,288/mt respectively before closing at $2,286.5/mt, an increase of $2.5/mt or 0.11%.

On the macro level, the US debt ceiling negotiations have dragged on, exacerbating market panic and macro uncertainties. On fundamentals, end-user consumption is still recovering, but aluminium market is still oversupplied. Due to decline prebaked anode and coal prices, aluminium prices have no cost support. Aluminium prices may face downside risks due to headwinds from macro and fundamentals.