OfBusiness Aluminium Dailies | 7th July 2023

Price

• MCX Aluminium prices opened at Rs. 194.85/kg and closed at Rs. 195.05/kg.
• LME opened at $2135.12/MT on Thursday and closed at $2124.82/MT.
• SHFE opened at 18,165Yuan/MT and closed at 18,235Yuan/MT.

Demand and Supply

• Aluminium billet social stocks in China’s major markets decreased by 10,200 MT compared to the previous week, reaching 136,100 MT as of July 6. However, the stocks remain high compared to previous years. The drop in billet prices stimulated demand in Foshan and Wuxi. Output reduction by smelters and reduced production by large billet plants have contributed to lower billet.
• The SHFE 2308 aluminium contract, the most actively traded contract, began trading at 17,865 Yuan/MT in the latest session. Throughout the trading period, it reached a low of 17,805 Yuan/MT and a high of 17,920 Yuan/MT before settling at 17,830 Yuan/MT. It experienced a decrease of 25Yuan/MT, or 0.14%. On the other hand, the LME aluminium market opened at $2,139/MT on Thursday. Its lowest point during trading was $2,127/MT, while the highest point was $2,153/MT. It closed at $2,130/MT, indicating a decline of $7/MT or 0.33%.

News

• Uncertainty has increased in the macroeconomic landscape, with the market anticipating stimulus policies from China. Market participants are closely monitoring the release of key data, such as the US non-farm payrolls data scheduled for today. In terms of market fundamentals, Yunnan’s aluminium output has been gradually increasing. However, recent data indicates a decline in downstream operating rates and weakened consumption. Although there has been a rise in the social inventory of aluminium ingots, it remains at a relatively low level.
• In the short term, the expectation is for SHFE aluminium to trade within a certain range. There are rumours circulating about power rationing in Leshan, Sichuan, which adds another element of uncertainty. Additionally, market participants should pay attention to potential opportunities arising from the narrowing price difference between domestic and overseas markets, which may result in the inflow of imported aluminium ingots.On the demand side, weakness persists, making it challenging to observe significant short-term improvements in consumption. However, the low levels of social inventory and warehouse receipts for aluminium ingots provide some support for lower aluminium prices. Expectations suggest that aluminium ingot prices may continue to experience wide fluctuations in the short term

OFB’s Opinion

• Looking at the overall market dynamics, the outlook for the week appears bearish for Aluminium. Strong resistance is anticipated on the smaller time frames, specifically in the range of Rs. 197/Kg to Rs. 199/Kg. Ideally, the prices are expected to remain within the range of Rs. 197/Kg to Rs. 203/Kg. Considering these factors, it is likely that Aluminium will experience a downward movement in the coming week.