SHANGHAI, Oct. 17 (SMM) -- Central Huijin Investment Limited, a unit of China's sovereign wealth fund, started to buy more shares in the four major state-owned banks at a cost of RMB 197 million to stabilize the stock market on Monday. On Wednesday, China’s State Council decided to implement new fiscal and credit measures to support SMEs. On Friday, China’s National Bureau of Statistics announced that China’s September CPI rose by 6.1% YoY, but down MoM, a sign that China has achieved initial success in curbing inflation by tightening monetary policy.

China sent several positive signals that its economy was improving and that monetary policy was easing somewhat, helping push up the Shanghai composite index to above 2,400 points following China’s National Day holiday. However, SHFE aluminum prices were weak and sluggish domestic and overseas demand greatly depressed market sentiment, with daily trading volumes for SHFE three-month aluminum contracts below 40,000 lots and even falling further as investors generally left the market after profit-taking. In general, SHFE aluminum prices moved narrowly between RMB 16,600-16,800/mt, with upward momentum gradually weakening. Weak spot aluminum consumption spurred market pessimism, but any declines in SHFE aluminum prices should be limited due to high production costs.

Spot premiums over SHFE current-month aluminum contract prices fell rapidly from RMB 100/mt as the delivery date neared. Sluggish market sentiment caused SMM aluminum prices to fall rapidly after prices rose briefly near the RMB 17,000/mt mark, causing trading sentiment to weaken further. A small number of cargo-holders sold their goods at lower prices due to tight cash flows, but the downward room was limited. Most traders stood on the sidelines, keeping market sentiment extremely weak.