SHANGHAI, Nov. 28 (SMM) -- SHFE 1202 aluminum contracts became the most actively traded contracts last week. The most actively traded contract prices initially fell below RMB 16,000/mt, but later found support at RMB 15,800/mt given limited short selling momentum. SMM aluminum prices moved below RMB 16,000/mt. Downstream buying interest was low given tight credit at the month’s end and as pessimism grew in the market. Lower-priced aluminum supply was still sufficient despite sales restrictions by cargo-holders while prices were low. Spot aluminum prices hit a new low of near RMB 15,800/mt, and although spot aluminum was quoted at a slight premium over SHFE current-month aluminum contract prices, most deals were still made at low-end prices.
SHFE 1202 aluminum contract prices will climb gradually following the exit of short investors from the market, with prices expected to move toward the 5-day moving average, but prices will be unable to break through RMB 16,000/mt mark, with weak support at RMB 15,900/mt. Since the transportation capacity along the Longhai railway line was limited last week, arrivals to East China spot aluminum markets will grow sharply in the coming week, but demand still remains sluggish, which will help cut spot premiums or even change spot premiums into discounts. Spot premiums are expected between negative RMB 30/mt to positive RMB 30/mt. Trading sentiment will be quiet amid cash flow pressures at month’s end.