64% Chinese aluminium smelters see aluminium prices stabilize this week

SMM surveyed 44 Chinese aluminium smelters about their opinions over aluminium price outlook. About 64 per cent of them expect SHFE 1610 aluminium to stabilize between RMB 12,200-12,350/mt and LME aluminium between USD 1,630-1,655/mt. Aluminium stocks in domestic five major markets continued growing on Monday, up another 7,000 mt from last Thursday.

China’s investment, consumption and industrial value-added data all weakened, and financial data for July also pointed to declines. These will prevent aluminium prices from rising. SHFE 1610 aluminium has met resistance at the 5-day moving average, but found support at the 60-day moving average.

Another 22 per cent expect SHFE 1610 aluminium to fall below RMB 12,200/mt and LME aluminium below USD 1,630/mt, citing weakening downstream demand and growing supply. Orders at domestic aluminium processors dropped in August from July. Aluminium smelters are cutting ratio of aluminium liquid output against falling demand for aluminium billet, which will increase aluminium ingot output.

When combined with release from new and restarted capacity, aluminium supply will grow. The rest 14 per cent are bullish that SHFE 1610 aluminium will rise above RMB 12,350/mt and LME aluminium will rise above USD 1,655/mt. Poor US economic data will weaken expectations for US rate hike, thus putting downward pressure on the US dollar. While Germany’s CPI kept rising in recent three months, the figure is still far from the ECB’s 2 per cent target. Market expects the ECB to loosen monetary policy. Positions of SHFE 1609 aluminium were high at 94,976 lots, meaning a potential short squeeze is expected to happen.

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