SMM Aluminum Price Forecast (Dec. 12-16)

SHANGHAI, Dec. 12 (SMM) -- SHFE aluminum prices were also weak, with sluggish demand outweighing positive impact from the recent electricity price hike. The exit of long and short investors from the market caused positions for SHFE three-month aluminum contracts to fall below 70,000 lots. Transactions also hit a new low, helping drag down SHFE three-month aluminum contract prices to RMB 16,100/mt, down from RMB 16,200/mt. The global economic slowdown was prompting spot aluminum traders to sell goods, helping limit increases in spot premiums. Downstream buying interest remained low due to tight credit and weak orders. As a result, SMM aluminum prices fell slightly below RMB 16,200/mt, while trading activity was lackluster. 

SHFE 1203 aluminum contracts will become the most actively traded contracts, and will struggle at RMB 16,100/mt given a lack of trading activity and weak market fundamentals. Cargo-holders will remain interested in selling goods before the delivery date, and although falling SHFE aluminum prices are pushing spot premiums higher, spot aluminum prices will still likely fall below RMB 16,100/mt due to soft downstream demand.