01 MARCH 2016Shanghai Metal Market
About 64% of Chinese aluminium smelters see prices stabilizing this week
Edited by : AL CIRCLE
2 min read
About 64% of the 33 Chinese aluminium smelters surveyed by SMM expect aluminium prices to stabilize this week.
Those neutral smelters see SHFE 1605 aluminium at RMB 11,250-11,380/mt and LME aluminium at USD 1,550-1,575/mt. Aluminium consumption in east China is strong, but demand recovery is tepid in other markets. The divergence will keep market players cautious. Caution will also prevail before the upcoming NPC & CPPCC sessions. KDJ indicates that SHFE aluminium will have little upward momentum, while support at the 5-day moving average is strong.
Another 27 per cent are bullish that SHFE 1605 aluminium will climb to RMB 11,400-11,500/mt and that LME aluminium will rise above USD 1,580/mt, citing positive factors:
1. Trading in domestic spot market has become active, allowing spot discounts to narrow to RMB 50-60/mt.
2. Aluminium stocks in China’s major markets have grown more slowly.
3. Alumina prices keep rising on falling output, offering cost support to aluminium prices.
4. Moving averages of SHFE 1605 aluminium are pointing upward, reflecting market optimism.
The rest 9 per cent fear that SHFE 1605 aluminium will fall below RMB 11,250/mt and LME aluminium will fall below USD 1,550/mt, citing several negative factors:
1. Tumbling Chinese A-share market will take a toll on commodity market.
2. One aluminium smelter in put new aluminium capacity online, with output yielded at the end of February.
3. Some local governments will cut power tariffs for local aluminium smelters by RMB 0.1/Kwh, which will give some incentive to restart idled capacity.
4. The US dollar index stays high, weighing on LME aluminium.
Those neutral smelters see SHFE 1605 aluminium at RMB 11,250-11,380/mt and LME aluminium at USD 1,550-1,575/mt. Aluminium consumption in east China is strong, but demand recovery is tepid in other markets. The divergence will keep market players cautious. Caution will also prevail before the upcoming NPC & CPPCC sessions. KDJ indicates that SHFE aluminium will have little upward momentum, while support at the 5-day moving average is strong.
Another 27 per cent are bullish that SHFE 1605 aluminium will climb to RMB 11,400-11,500/mt and that LME aluminium will rise above USD 1,580/mt, citing positive factors:
1. Trading in domestic spot market has become active, allowing spot discounts to narrow to RMB 50-60/mt.
2. Aluminium stocks in China’s major markets have grown more slowly.
3. Alumina prices keep rising on falling output, offering cost support to aluminium prices.
4. Moving averages of SHFE 1605 aluminium are pointing upward, reflecting market optimism.
The rest 9 per cent fear that SHFE 1605 aluminium will fall below RMB 11,250/mt and LME aluminium will fall below USD 1,550/mt, citing several negative factors:
1. Tumbling Chinese A-share market will take a toll on commodity market.
2. One aluminium smelter in put new aluminium capacity online, with output yielded at the end of February.
3. Some local governments will cut power tariffs for local aluminium smelters by RMB 0.1/Kwh, which will give some incentive to restart idled capacity.
4. The US dollar index stays high, weighing on LME aluminium.
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