12 JULY 2016Shanghai Metals Market
55% Chinese aluminium smelters see aluminium prices stabilizing this week, SMM survey
Edited by : AL CIRCLE
2 min read
SMM surveyed 44 Chinese aluminium smelters about their opinions over aluminium price outlook.
About 55 per cent of them expect SHFE 1609 aluminium to consolidate at RMB 12,450-12,600/mt and LME aluminium at USD 1,635-1,665/mt, citing two reasons. First, positive US June non-farm employment has reversed weakness since April, which is bad news for investors, given weak Chinese and European economy. Second, while longs are taking the upper hand in SHFE aluminium market, long buying is waning and short momentum is gathering. SHFE 1609 aluminium has found support at moving averages, though.
Another 18% expect SHFE 1609 aluminium to hold firm at above RMB 12,600/mt and LME aluminium move at above USD 1,665/mt, citing several positive factors. First, flood has hampered aluminium ingot shipment from northwest China to south and east China, forcing smelters to ship to inland areas, such as Gongyi, where consumption is weaker. Second, SHFE aluminium warehouse warrants were just 14,156 mt as of Monday, which were far below positions of SHFE 1607 aluminium, so a potential short squeeze is likely to take place. Third, expectations for monetary stimulus in China and Europe will also benefit base metals.
The 27% are bearish that SHFE 1609 aluminium will fall below RMB 12,450/mt and LME aluminium will drop below USD 1,635/mt. First, the number of oil drilling wells in the US rose to 351 last week, up 35 from the week ending May. Mounting crude oil stocks in the US and weak demand from China will take a toll on crude oil prices. Second, falling orders at aluminium processors in the off-season will hurt aluminium consumption. Third, release from new and restarted aluminium capacity in China will add to market supply.
Chinese Aluminium Smelters Hurt By Rising Power Costs, SMM Reports
Rising coal prices have passed through to power costs at Chinese aluminium smelters relying on captive power, SMM learned.
Coal prices rose about 15% in early July compared with late March. This has pushed up captive power costs at Shandong Weiqiao Group, Shandong Xinfa Group, etc. However, power costs were stable at smelters in Xinjiang, Gansu and some other regions that have captive coal mines.
SMM statistics showed the weighted average cost at domestic aluminium smelters increased to around 11,400 yuan/tonne in early July.
About 55 per cent of them expect SHFE 1609 aluminium to consolidate at RMB 12,450-12,600/mt and LME aluminium at USD 1,635-1,665/mt, citing two reasons. First, positive US June non-farm employment has reversed weakness since April, which is bad news for investors, given weak Chinese and European economy. Second, while longs are taking the upper hand in SHFE aluminium market, long buying is waning and short momentum is gathering. SHFE 1609 aluminium has found support at moving averages, though.
Another 18% expect SHFE 1609 aluminium to hold firm at above RMB 12,600/mt and LME aluminium move at above USD 1,665/mt, citing several positive factors. First, flood has hampered aluminium ingot shipment from northwest China to south and east China, forcing smelters to ship to inland areas, such as Gongyi, where consumption is weaker. Second, SHFE aluminium warehouse warrants were just 14,156 mt as of Monday, which were far below positions of SHFE 1607 aluminium, so a potential short squeeze is likely to take place. Third, expectations for monetary stimulus in China and Europe will also benefit base metals.
The 27% are bearish that SHFE 1609 aluminium will fall below RMB 12,450/mt and LME aluminium will drop below USD 1,635/mt. First, the number of oil drilling wells in the US rose to 351 last week, up 35 from the week ending May. Mounting crude oil stocks in the US and weak demand from China will take a toll on crude oil prices. Second, falling orders at aluminium processors in the off-season will hurt aluminium consumption. Third, release from new and restarted aluminium capacity in China will add to market supply.
Chinese Aluminium Smelters Hurt By Rising Power Costs, SMM Reports
Rising coal prices have passed through to power costs at Chinese aluminium smelters relying on captive power, SMM learned.
Coal prices rose about 15% in early July compared with late March. This has pushed up captive power costs at Shandong Weiqiao Group, Shandong Xinfa Group, etc. However, power costs were stable at smelters in Xinjiang, Gansu and some other regions that have captive coal mines.
SMM statistics showed the weighted average cost at domestic aluminium smelters increased to around 11,400 yuan/tonne in early July.
Previous article
Alba reports higher sales in Q2 2016 despite sluggish aluminium market
Next articleSHFE aluminium to hover at highs
Grow with
AL Circle
