About 43% of Chinese aluminium smelters see aluminium prices rise this week

About 43 per cent of the 42 Chinese aluminium smelters surveyed by SMM expect aluminium prices to rise this week.

Those optimists see SHFE 1605 aluminium rising above RMB 11,800/mt and LME aluminium advancing above USD 1,500/mt, citing positive factors. First, many Chinese aluminium smelters have no plans to restart idled capacity or put new capacity online, so supply will remain tight for the foreseeable future. Second, aluminium stocks in China’s five major markets kept falling, allowing spot discounts to narrow to less than RMB 50/mt. Third, downstream consumption recovered and operating rates at processors are better than the same period last year. Fourth, technical side is positive for SHFE aluminium .

Another 52 per cent see SHFE 1605 aluminium stabilizing at RMB 11,600-11,750/mt and LME aluminium stabilizing at USD 1,475-1,495/mt. Investors are rolling positions to forward month SHFE aluminium contracts, which will keep SHFE 1605 aluminium in check. Continuous price rise will trigger profit-taking at highs, putting downward pressure on prices. On the other hand, shorts will be cautious about entering at current price level, which will put a floor under prices. Chinese A-share market has been hovering around 3,000 points recently, which will also leave SHFE aluminium largely stable.

Only 5 per cent are bearish that SHFE 1605 aluminium will fall below RMB 11,550/mt and LME aluminium will hit new low. SHFE aluminium saw big gains when LME market was closed, with the SHFE/LME aluminium price ratio already up to 7.94. LME aluminium will lack rising impetus after resuming trading, while SHFE aluminium will pull back from highs.