SHANGHAI, Mar. 11 (SMM) - Tougher housing control measures in China sent SHFE 1305 aluminum contract prices down to RMB 14,520/mt last week along with falling stock markets. Later in the week, prices for SHFE 1306 aluminum contracts (the most active one) broke through RMB 15,000/mt following reports on Tuesday that the State Reserve Bureau (SRB) would buy 300,000 mt of aluminum ingot. However, SHFE aluminum for June delivery was stagnant at high prices due to struggle between longs and shorts.
Spot aluminum prices rose froɭ RMB 14,330/mt to RMB 14,500/mt last week, thanks to production cuts and news that the State Reserve Bureau (SRB) will buy aluminum ingot. Cargo holders held back goods to support prices, while traders actively sought out low-priced deliverable goods, widening the spread between deliverable and non-deliverable ingot. Excess non-deliverable ingot and tepid downstream buying interest held spot aluminum price gains below SHFE aluminum. Spot discounts expanded to near RMB 150/mt. Brief positive flashes will do little to ease the mounting pressure from oversupply, so aluminum prices are still under downward pressure.
In this coming week, LME aluminum should test resistance at USD 2,000/mt, while SHFE 1306 aluminum contract prices will remain stable at RMB 14,800/mt. Spot discounts for deliverable aluminum ingot are expected to narrow slightly with the approach of the delivery date for SHFE current-month aluminum contracts. However, discounts for non-deliverable aluminum ingot will remain due to ample supply. Spot aluminum prices will test support at RMB 14,500/mt, with moderate trading activity expected.