SHANGHAI, Feb. 6 (SMM) -- SHFE three-month aluminum contract prices fell continuously during the first week of trading following the Chinese New Year holiday, with prices slipping from RMB 16,460/mt to RMB 16,200/mt and testing support at the 20-day moving average. Growing spot aluminum inventories and a delay in production resumption at downstream processors depressed spot aluminum prices, with spot discounts remaining above RMB 100/mt and SMM aluminum prices moving below RMB 16,000/mt. High discounts gave some traders opportunities for  profits from the spread between futures and spot markets, resulting in quiet trading in spot markets.

SHFE three-month aluminum contract prices will fall to RMB 16,100/mt and some demand at lower prices will help limit declines in SHFE aluminum prices. Although trading activity will improve slightly in spot markets after February 6th, growing spot aluminum inventories will keep spot discounts around RMB 100/mt. Trading volumes expected to increase slightly as well.