SHFE aluminium to face possible short selling

SHFE 1606 aluminium will face possible short selling and move at RMB 12,600-12,800/mt Today, SMM observed in an early morning forecast.

Despite hawkish tone during the US Fed’s policy meeting, chance remains small for a rate hike in June. LME aluminium will move at USD 1,630-1,650/mt.

In China’s spot aluminium market, spot discounts of RMB 0-30/mt and spot premiums of RMB 0-10/mt are expected over SHFE 1605 aluminium contract.

Key macroeconomic indicators for base metal prices

Diverging trend among base metals should intensify on Thursday. Attention is turning to US annualized Q1 GDP today and market will continue digest news form US Fed April rate meeting.

US Q1 GDP growth is expected to slow down, which can be reflected by US soft labour market, weak inflation, consumption and property market in Q1.

Germany’s CPI may fall back again in April. The annualized CPI for March beat forecast but the PPI dropped unexpectedly in the same period, fuelling concerns about inflation outlook for the country. The ECB President also said that inflation may return to the negative territory in the next few months.

US Fed decided not to raise its key interest rate at its April rate meeting and indicated that global risks, that were a huge worry early in the year, are less of a concern now. Economic activity appears to have slowed, despite job market gains, the Fed said in its statement. It also noted that household spending had moderated. Inflation should remain at lows in short term but will rise to 2 per cent in mid-term. In should be noted that Kansas City Fed Chairman believes that the second rate hike will be at 0.5-0.75 per cent.

US Fed statement indicated that the future rate hike path will depend on economic figures and did not deny the likelihood of rate increase in June. US dollar posted rapid growth after the release of the statement.