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SMM Daily Review - 2012/1/30 Base Metals Market

posted Jan 30, 2012, 7:53 PM by BENKAI Co

Aluminum

The SHFE current-month aluminum contract opened at RMB 16,200/mt and closed RMB 105/mt lower at RMB 16,085/mt on Monday. Highest price of the day is RMB 16,250/mt. In the spot market, concentrated arrivals of aluminum ingots in the Chinese New Year holiday caused a surge in aluminum stocks. Purchases of the metal, however, had been limited as most downstream businesses will resume production until after the Lantern Festival. Spot aluminum was traded at discounts of RMB 100-150/mt over the SHFE current-month aluminum price. The traded volume stayed light and was contributed mainly by traders who are still pessimistic towards future aluminum prices.

In a most recent SMM survey on this week’s aluminum prices, 64% market respondents expect aluminum prices to see little change this week. Domestic consumption is little improved, climbing LME aluminum prices will only temporarily limit its downward space and spot aluminum therefore will stagnate near the RMB 16,000/mt mark. 28% respondents said aluminum prices will drop this week as aluminum stocks had surged to near 700,000 mt in the Chinese New Year holiday, downstream processors will not resume production until after the Lantern Festival and some goods holders will sell off to lower their stocks. Remaining 8% respondents are optimistic towards this week’s aluminum prices as Fed maintains low interest rates until the second half of 2014 and domestic investors expect the Chinese central bank to loosen monetary policies. Meanwhile, some downstream businesses will replenish stocks after the Chinese New Year, thereby helping aluminum price climb.

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