SHANGHAI, Mar. 18 (SMM) –Two weeks ago, prices of the most active SHFE aluminum contracts rose and met resistance at RMB 15,000/mt on news that the State Reserve Bureau (SRB) would buy aluminum ingots. SHFE 1306 aluminum contract prices, however, fell last Friday to move between the 10-day and 20-day moving average, with low-end price at RMB 14,800/mt and meeting resistance at RMB 14,900/mt.
Markets widely believed that the SRB would buy aluminum ingot at high prices on March 15, helping aluminum prices resist declines. Last week, mainstream traded prices for spot aluminum in Shanghai were stagnant at RMB 14,520-14,550/mt, with spot discounts narrowing from RMB 130/mt to RMB 50/mt due to approaching delivery date of SHFE current-month aluminum contracts. Downstream producers were purchasing as needed, and middlemen were cautious, with both concerned aluminum prices may fall following SRB’s bid invitation.
In the coming week, LME aluminum prices should test resistance at USD 2,000/mt, and prices for the most active SHFE aluminum contracts should fall further, with only weak support at RMB 14,800/mt. Spot discounts should grow to over RMB 150/mt early next week as surpluses will remain, and with traded prices stagnant at RMB 14,500/mt. Bearish sentiment is expected to dominated the market in the coming week.