About 32% of Chinese aluminium smelters bearish toward prices this week

About 32% of the 25 Chinese aluminium smelters surveyed by SMM paint a dismal picture of aluminium prices this week.

They are bearish that LME aluminium will fall below USD 1,465/mt and that SHFE 1603 aluminium will drop below RMB 10,600/mt, citing a series of negative factors: 1. Major Chinese aluminium smelters have announced plans to hoard aluminium from the market, but no action has been taken yet; 2. Downstream producers will begin closing early for the 2016 Chinese New Year holiday due in early February; 3. Global stock market remains weak. Chinese A-share market fell to 2847.54, a one-year low; 4. Crude oil prices will fall as sanctions on Iran are to be lifted soon; 5. US industrial output fell 0.4% MoM in December, triggering pessimism over US Q4 GDP.

Another 48% expect SHFE 1603 aluminium to consolidate between RMB 10,650-10,750/mt and LME aluminium to range USD 1,465-1,485/mt. 1. Both aluminium smelters and processors will close for the upcoming holiday, leaving supply and demand both weak. 2.It was reported that the PBOC plans to impose RRR for offshore financial institutions that deposit yuan in China, effective January 25, 2016, in an effort to slow yuan’s depreciation.

The rest 20% are bullish that LME aluminium will break through the 40-day moving average and SHFE 1603 aluminium will climb above RMB 10,750/mt, citing a series of positive factors.

1. Aluminium stocks in China’s five major trading markets on Monday fell 6,000 mt from last Thursday due to production cuts.
2. Home prices in China rose slightly on a month-on-month basis in December, with medium and large cities showing notable recovery.

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