Aluminum
The most active SHFE aluminum contract for June delivery opened higher at RMB 16,210/mt but failed to break through the 10-day moving average. The light metal nevertheless retained gains of RMB 40/mt or 0.25% settling at RMB 16,235/mt the 5-day moving average. Such gains, however, were mainly contributed by profit-taking by shorts, with positions dropping 584 lots to 44,074 lots. SMM expects the contract to test support at the RMB 16,200/mt mark in the near term.

Spot aluminum traded between RMB 15,980-16,000/mt in Shanghai, at discounts of RMB 30-50/mt over the SHFE current-month aluminum price. Goods holders have been holding back inventories in light of a rebound in SHFE aluminum and also backed by sufficient capital reserve despite financial settlements at month’s end. Though quotations were held at RMB 16,000/mt, most deals were struck between RMB 15,980-15,990/mt as weak demand exerted a stronger influence.

In an SMM survey on this week’s aluminum prices, 28% market players included are optimistic and expect a breakthrough to above RMB 16,000/mt in the hope of a recovery of demand in 2Q. The majority 61% respondents expect stability, though, citing stagnating SHFE aluminum prices, failed upward attempts of LME aluminum and low buying interest for higher prices. Remaining 11% respondents put the light metal on the negative side and expect aluminum spot to slip to near RMB 15,950/mt given weakness in global economies and tight cash flow at month’s end.