SMM Weekly Forecast: Sluggish Consumption To Put A Lid On SHFE Aluminium Prices

SHANGHAI, Jul 4 (SMM) –There was a surprise drop in US initial jobless claims, and resilient Q1 GDP suggests a strong economy, turning the market hawkish. China's Manufacturing PMI rebounded slightly, still within contraction territory, indicating possible future policy stimulus.

Aluminium smelting in Yunnan has been gradually resuming, with a reduction in Shandong's output. China’s aluminium smelter capacity recorded marginal growth in June. Yunnan's output may put supply under pressure by July-end. Increased aluminium smelter output, alongside weakening marginal consumption, may slightly boost aluminium stocks. Short-term supply increase and demand decrease expectations will persist. Hence, SHFE 2308 aluminium contract may hover around 18,000 yuan/mt, with LME Aluminium trading between $2,100-2,280/mt. It’s crucial to monitor changes in China’s stock levels and imported aluminium ingot opportunities, due to the narrowing gap between domestic and overseas prices.