22 JUNE 2016Shanghai Metals Market
Short squeeze to boost SHFE aluminium prices, SMM reports
Edited by : AL CIRCLE
2 min read
A potential short squeeze is in sight, and this will bolster SHFE near month aluminium contract prices, most market players contacted by SMM predict.
Positions of SHFE 1607 aluminium are 111,144 lots yesterday, which require 277,860 tonnes of aluminium for delivery. However, inventories of deliverable SHFE aluminium were just 57,399 tonnes, which is far from enough.
Such high positions will expose investors to potential short squeeze. So, shorts will either have to simply close out positions, which will boost SHFE 1607 aluminium prices , or roll positions to distant month aluminium contracts on the SHFE, which will support SHFE 1607 aluminium prices while driving down SHFE distant month aluminium contract prices.
Continuous declines in domestic aluminium stocks serve as another support to aluminium prices. SMM statistics showed aluminium stocks in China’s five major markets fell from 406,000 tonnes on June 17 to 381,000 tonnes as of June 20. The figure was down 59 per cent from this year’s high of 928,000 tonnes.
SMM expects possible short squeeze and falling stocks to support spot premiums in domestic market.
As of June 20, SMM spot aluminium was offered at a premium of 100 yuan/tonne over SHFE 1607 aluminium, holding at this level for three consecutive days.
Positions of SHFE 1607 aluminium are 111,144 lots yesterday, which require 277,860 tonnes of aluminium for delivery. However, inventories of deliverable SHFE aluminium were just 57,399 tonnes, which is far from enough.
Such high positions will expose investors to potential short squeeze. So, shorts will either have to simply close out positions, which will boost SHFE 1607 aluminium prices , or roll positions to distant month aluminium contracts on the SHFE, which will support SHFE 1607 aluminium prices while driving down SHFE distant month aluminium contract prices.
Continuous declines in domestic aluminium stocks serve as another support to aluminium prices. SMM statistics showed aluminium stocks in China’s five major markets fell from 406,000 tonnes on June 17 to 381,000 tonnes as of June 20. The figure was down 59 per cent from this year’s high of 928,000 tonnes.
SMM expects possible short squeeze and falling stocks to support spot premiums in domestic market.
As of June 20, SMM spot aluminium was offered at a premium of 100 yuan/tonne over SHFE 1607 aluminium, holding at this level for three consecutive days.
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