About 65% of Chinese smelters see aluminium prices stabilizing this week

About 65% of the 20 Chinese aluminium smelters surveyed by SMM expect aluminium prices to stabilize this week.

They expect LME aluminium to hover between USD 1,500-1,520/mt and SHFE 1604 aluminium to consolidate at RMB 10,750-10,900/mt. Aluminium stocks in China’s major trading markets grew significantly after the week-long holiday, but were lower than in the same period last year. Downstream demand has yet to fully recover. Traders were actively stockpiling goods out of optimism.

Another 10% are bearish that LME aluminium will fall to USD 1,480-1,500/mt and that SHFE 1604 aluminium will drop below RMB 10,700/mt, citing a series of negative factors: US non-farm payrolls were poor; GDP in the euro zone grew slowly in December; Japan’s GDP missed forecast in Q4; China’s manufacturing PMI was poor in January. Aluminium consumption in China in 2016 is expected to be weaker than in 2015. Many aluminium ingots arrived during the week-long holiday. But many aluminium processors will not return to work until after the Chinese Lantern Festival.

The rest 25% see SHFE 1604 aluminium rising above RMB 10,900/mt and LME aluminium rising to USD 1,525-1,545/mt. They gave several reasons: SHFE aluminium rose on the first trading day after the week-long holiday due to long buying, indicating market optimism; Technical chart is positive for SHFE aluminium; Aluminium stocks in major trading markets, though up from pre-holiday level, are lower than a year ago. Cargo holders are holding back goods, waiting for demand to pick up. Expectations are running high that the US Fed will slow rate hike process following dovish speech by US Fed Chair Yellen.