44% Chinese aluminum smelters see aluminum prices fall this week, SMM survey

SMM surveyed 44 Chinese aluminum smelters about their opinions over aluminum price outlook.

About 44% of them expect SHFE 1608 aluminum to fall below RMB 11,800/mt and LME aluminum below USD 1,540/mt. First, total positions of all SHFE aluminum contracts surged 34,000 lots on Monday, many of which were believed to be short positions. SHFE 1608 aluminum has met strong resistance at moving averages. Second, suppliers are eager to sell out of pessimism, but downstream producers showed no signs of restocking, with spot premiums in Shanghai down from RMB 100/mt to near zero over SHFE front-month aluminum. Third, demand will weaken in June due to onset of the off-season.

Another 36% expect SHFE 1608 aluminum to stabilize at RMB 11,800-12,000/mt and LME aluminum hold stable at USD 1,540-1,555/mt. First, aluminum stocks in China’s three major markets increased for the first time on June 6, which some market players considered as signs of a turning point. Besides, growing restarted and new aluminum capacity will also prevent aluminum prices from going up.

The 30% are bullish that SHFE 1608 aluminum will return above RMB 12,000/mt and LME aluminum will hold at above USD 1,555/mt. First, a weaker dollar from disappointing US non-farm payrolls will lend support to LME aluminum. Second, trading has been relatively active in other base metals market, which will improve sentiment in aluminum market as well. Third, downstream restocking ahead of the Dragon Boat Festival will also push prices up.

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