SMM Aluminum Price Forecast (Oct. 22-26)

SHANGHAI, Oct. 23 (SMM) - SHFE 1212 aluminum contract prices moved between RMB 15,420-15,480/mt early last week due to profit-taking by longs and shorts. The most active SHFE contract price edged up along with LME aluminum prices in the second half of last week, but failed to break through RMB 15,500/mt. Positions of the 1212 aluminum contract were 10,000 lots more than the 1301 contract. Hence, it will take at least a week before the 1301 contract can become the most active contract, given the current thin trading activity.

With spot aluminum consumption showing no significant improvement, spot aluminum prices struggled near RMB 15,300/mt. Mainstream traded prices in Shanghai sank to a low of RMB 15,280/mt last week, near the year’s low of RMB 15,250/mt seen in August. Most cargo holders showed stronger interest in moving goods due to inventory pressure, but downstream producers refrained from buying at high prices, pressuring spot aluminum prices under RMB 15,300/mt. Overall trading was light.

Investors will remain cautious in the coming week, and spot discounts are expected between RMB 80-120/mt since supply will increase as cash flows tighten at the end of the month and since demand remains sluggish. LME aluminum prices will struggle at USD 2,000/mt and should move between USD 1,950-2,050/mt, while SHFE aluminum contract prices will be between RMB 15,420-15,560/mt. Spot aluminum prices may not reach RMB 15,300/mt and overall trading should be light.