【Al Daily】SHFE aluminum fell for the 2nd consecutive week and market is cautious on longs and shorts

Date 9/14/2018 5:11:41 PM Source: SHMET

Spot Market

Shanghai spot aluminum ingot is quoted at 14490-14530 yuan/ton, up 20 yuan/ton, with contango 20 yuan/ton to backwardation 20 yuan/ton against 1809 contract. LME aluminum fluctuated in Asian trading hours and held near periodic lows overall. After falling for several consecutive days, SHFE aluminum picked up today. Traders quote cautiously. As delivery date is approaching, futures and spot price almost reach to level. Aluminum ingot spot price rose compared with yesterday. The downstream purchased on demand and market transaction performance has no obvious improvement.


Comments from SHMET

From the macro side, the US dollar has continuously declined this week as the US and China resume trade talks and the US inflation data fell short of expectations. For China, while both industrial and consumer growths were higher than expected, investment growth fell to a record low. Its August economic data are both encouraging and disappointing.


Looking at fundamentals, on the one hand, Shandong province made clear that the cross-subsidy standard for self-owned power plants is RMB 0.1016 per KWH. The transition period from July 1, 2018 to December 31, 2019 will be temporarily implemented at RMB 0.05 per KWH. And alumina cost is expected to rise. On the other hand, under the background of tight domestic supply of bauxite and strike in Alcoa Australia, the price of raw alumina remains high. China produced 2.84 million tons of primary aluminum in August, or 916,000 tons per day, less than in July, as profit margins for aluminum producers were squeezed by high cost.


LME aluminum overall are in narrow arrangement near 2050 USD this week, touching the low point 2010 USD. After meeting resistance when surged previously, SHFE aluminum fell for the second consecutive week. Main 1811 contract breached several support levels this week, hitting 14475 yuan/ton. Even though, rising cost will provide support for aluminum ingot futures and spot price, the market is cautious of longs and shorts after experiencing continuous decline. Macro factors and oversea supply of alumina need to be focused in the short term.

Edited by SHMET