SHANGHAI, Sept. 26 (SMM) -- SHFE 1112 aluminum contracts became the most actively traded contracts on Thursday and stood at RMB 17,000/mt early last week. Prices later fell below this mark due to growing investor pessimism, with trading volumes increasing but prices falling as low as RMB 16,380/mt. SMM spot aluminum prices struggled at RMB 17,500/mt, but slower declines in SHFE aluminum prices caused cargo-holders to hold goods, although lower-priced goods were still available in the market given tightening cash flows at month’s end. Spot aluminum prices fell sharply, but were still firm above RMB 17,000/mt after SHFE aluminum prices tumbled on Friday. Downstream processors made limited purchases for stock building, but trading sentiment was still sluggish due to tight cash flows and market pessimism.
SMM predicts SHFE 1112 aluminum contract prices will move below RMB 17,000/mt in the coming week, with prices expected to find support at RMB 16,000/mt. SMM aluminum prices will struggle around RMB 17,000/mt and downstream buying interest will be very low given growing cash flow pressures at month’s end and due to limited purchases ahead of China’s National Day holiday. Overall trading sentiment will remain sluggish.