60% Chinese aluminium smelters expect aluminium prices to stabilize this week

About 60 per cent of them see SHFE 1607 aluminium stabilizing at RMB 12,250-12,500/mt and LME aluminium consolidating at USD 1,530-1,550/mt. On the technical side, the 10-day moving average will offer support, while the 20-day moving average will pose resistance. Investors are rolling positions to SHFE 1608 aluminium contracts, which will reduce price volatility on SHFE 1607 aluminium. Besides, stable alumina prices will also give aluminium prices no reason to rise or fall

Another 25 per cent are bearish that SHFE 1607 aluminium will fall below the 10-day moving average and LME aluminium will fall below USD 1,530/mt. First, panic ruled the market after ferrous metals prices hit daily downside limit on Monday. Second, downstream consumption has softened in Wuxi after entering May. Some aluminium processors there said orders fell in May and said customers are not in a hurry to ask them to fulfill orders. Warehouse withdrawals dropped in Wuxi compared with April. Third, despite mixed US economic data, weak Japanese yen and euro zone will keep the US dollar strong.

Only 15 per cent are bullish that SHFE 1607 aluminium will rise above RMB 12,500/mt and LME aluminium will rise above USD 1,550/mt. First, firm spot aluminium prices will offer momentum to SHFE aluminium. Spot premiums in east China have been RMB 20-30/mt over SHFE 1606 aluminium recently. Spot premiums will last due to tight supply. Premiums in Guangdong over Shanghai remained above RMB 200/mt. Second, combined aluminium stocks in Shanghai, Wuxi and Guangdong on Monday fell 25,000 mt from last Thursday as fewer goods arrived this past weekend. Aluminium stocks in China’s five major markets fell to near 530,000 mt last Thursday.