SHANGHAI, Dec. 10 (SMM) – The SHFE 1301 aluminum contract fell below all daily moving averages last week and even fell to RMB 15,200/mt last Thursday, returning to levels seen before the first round of State Reserve Bureau (SRB) aluminum ingot purchase. SHFE 1303 aluminum contracts became the most active on Monday.

Falling SHFE aluminum prices sent mainstream traded prices of spot aluminum in east China down to RMB 15,100/mt from RMB 15,150/mt. Some traders held back goods at lower prices, helping spot discounts narrow to RMB 50/mt. However, tight cash flows at year’s end depressed downstream buying, leaving only middlemen to go bargain-hunting. With no new round of SRB aluminum ingot purchases announced and with inventories in east China mounting, particularly in Wuxi, mainstream traded prices dropped below RMB 15,100/mt. SHFE aluminum prices continued to slide, triggering considerable bearishness. Some traders with long-term contracts rushed to move goods for cash at the start of the month, putting further downward pressure on aluminum prices for the immediate term.

Aluminum prices are expected to trade in a narrow range in the coming week, with LME aluminum prices testing support at USD 2,050/mt. SHFE 1303 aluminum contracts will become the most active, with prices trying to find support at RMB 15,300/mt. Spot aluminum prices should struggle at RMB 15,100/mt, with spot discounts narrowing to RMB 50/mt as the delivery date for current-month contracts approaches. Overall trading will be light.