SHANGHAI, Apr. 28 (SMM) -- The most active SHFE aluminum contract climbed from RMB 16,050/mt to as high as RMB 16,200/mt and led gains by all base metals early in the week. Resistance turned strong at the RMB 16,200/mt mark as the coming May Day holiday and weak demand weighed. Whether it can break through the mark has yet to be decided by LME aluminum performance following the holiday.
SHFE aluminum futures rose steadily in the last trading week before China’s May Day holiday. Spot aluminum was stable above RMB 16,000/mt on expectations of pre-holiday stock replenishments. Gains in aluminum spot prices lagged gains by SHFE aluminum futures as traders sold stocks at the month’s end and since stock replenishing demand did not materialize as expected. As a result, spot discounts over current-month SHFE aluminum contracts expanded to RMB 40/mt, and trading remained light.
The most active SHFE aluminum contract should continue to test RMB 16,100/mt, while spot aluminum prices will stabilize above RMB 16,000/mt on increased demand for stock replenishing post-holiday. Resistance to higher prices will be strong, limiting any price increases, but trading volumes are expected to climb slightly.