11 JULY 2016Shanghai Metals Market
SHFE aluminium to gather rising strength
Edited by : AL CIRCLE
2 min read
Big possibility of short squeeze will push SHFE 1609 aluminium up to RMB 16,520-16,700/mt on Monday, June 11.
The US dollar gained favor as US non-farm payrolls hit 8-month high in June. But strong dollar will have little impact on LME aluminium. LME aluminium will move at USD 1,650-1,675/mt.
In China’s spot aluminium market, spot premiums of RMB 30-70/mt are expected over SHFE 1607 aluminium contract.
Key Macroeconomic Indicators for Base Metal Prices
Market attention will focus on China Q2 economic data, the Bank of England (BOE)’s July policy meeting, as well as June US non-farm payrolls this week.
Base metals saw big volatility in recent two weeks. Market sentiment has turned from expectations for global monetary stimulus following the UK’s decision to leave the EU to concerns over economic downturn.
Massive monetary stimulus by the PBOC did little to boost economic growth. Yuan’s depreciation did not benefit exports. Private investment kept slowing down. Retail sales grew slower. It appears that Chinese economy has stabilized. However, Chinese economy still relies on government support. With the ongoing supply side reform, local government debt keeps piling up. Chinese economic data to be released on Friday will give market a clear view of whether Chinese economy will stabilize or slow down.
US non-farm payrolls increased 287,000 in June, reversing declines in previous two months, easing concerns over deterioration in US labor market. Non-farm payrolls had been unexpectedly weak since April. Investors used to expect that the US Fed will seldom lift interest rate or even cut interest rate later this year.
The BOE will probably announce interest rate cut this Thursday to minimize negative impact from UK leave vote.
Crude oil prices have pulled back after hitting highs. The number of oil drilling wells increased to 351 last week, up from 316 in the last week of May. Pullback in crude oil will have negative impact on base metals.
Base metals will see bigger volatility this week, forecasts SMM.
The US dollar gained favor as US non-farm payrolls hit 8-month high in June. But strong dollar will have little impact on LME aluminium. LME aluminium will move at USD 1,650-1,675/mt.
In China’s spot aluminium market, spot premiums of RMB 30-70/mt are expected over SHFE 1607 aluminium contract.
Key Macroeconomic Indicators for Base Metal Prices
Market attention will focus on China Q2 economic data, the Bank of England (BOE)’s July policy meeting, as well as June US non-farm payrolls this week.
Base metals saw big volatility in recent two weeks. Market sentiment has turned from expectations for global monetary stimulus following the UK’s decision to leave the EU to concerns over economic downturn.
Massive monetary stimulus by the PBOC did little to boost economic growth. Yuan’s depreciation did not benefit exports. Private investment kept slowing down. Retail sales grew slower. It appears that Chinese economy has stabilized. However, Chinese economy still relies on government support. With the ongoing supply side reform, local government debt keeps piling up. Chinese economic data to be released on Friday will give market a clear view of whether Chinese economy will stabilize or slow down.
US non-farm payrolls increased 287,000 in June, reversing declines in previous two months, easing concerns over deterioration in US labor market. Non-farm payrolls had been unexpectedly weak since April. Investors used to expect that the US Fed will seldom lift interest rate or even cut interest rate later this year.
The BOE will probably announce interest rate cut this Thursday to minimize negative impact from UK leave vote.
Crude oil prices have pulled back after hitting highs. The number of oil drilling wells increased to 351 last week, up from 316 in the last week of May. Pullback in crude oil will have negative impact on base metals.
Base metals will see bigger volatility this week, forecasts SMM.
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