SHFE aluminium set for further gains after hitting new high on Oct 13

SHFE 1611 aluminium will likely rise to RMB 12,750-12,950/mt today, driven by south-bound aluminium stocks and downstream stocking before the weekend, stated an early morning forecast by Shanghai Metals Market. Aluminium traded on London Metal Exchange will meet resistance and move at USD 1,680-1,700/mt today.

According to an SMM survey, in east China spot market, spot discounts of RMB 150-110/mt are expected over SHFE 1610 aluminium contract.

Data as on 13/Oct/2016



SMM Aluminium prices in rmb/metric ton

On Wednesday’s night trading, SHFE 1611 aluminium opened at RMB 12,695/mt and ended at RMB 12,700/mt.

On Thursday, SHFE 1611 aluminium opened at RMB 12,695/mt and hit a high of RMB 12,815/mt. But the most active contract then fell back, ending at RMB 12,765/mt. Trading volumes were up to 164,466 lots, and positions were up 20,996 lots to 225,132. SMM data showed aluminium stocks in China’s five major markets continued falling, which will underpin SHFE aluminium at highs.

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Key macroeconomic indicators

Market will eye China and US September inflation and US September retail sales on Friday. Wholesales in the US rose more than expected in August. So, there is a chance that US retail sales will improve as well in September. This will offer rising impetus to the US dollar index.

China’s PPI fell at a slower pace on a year-on-year basis in September, mirroring nearly five-month high in raw material purchasing price index under China’s official manufacturing PMI in September. China’s CPI is expected to rise in September, but the growth will be limited, checked by declines in pork prices.  

Several US Fed officials will deliver speeches today, which might send hawkish tone among traders.