SHANGHAI, Oct. 15 (SMM) – December aluminum on the Shanghai Futures Exchange (SHFE), the most active one, declined to RMB 14,420/mt after opening at RMB 14,465/mt on Monday, dragged down by falling SHFE 1310 aluminum contracts. However, the contract nudged up at the tail of the session, closing at RMB 14,440/mt, up RMB 5/mt. Trading volumes contracted 3,808 lots to 5,604 lots, and positions also shrank 1,488 lots to 66,562 lots.
Mainstream traded prices for spot aluminum in Shanghai were RMB 14,600-14,610/mt on Monday, a premium of RMB 0-10/mt over SHFE 1310 aluminum contracts. Aggressive sales by Inner Mongolia Datang Renewable Resources and Henan Shenhuo Group sent prices in Wuxi down to RMB 14,600-14,610/mt in Wuxi, flat with Shanghai. Prices were RMB 14,610-14,620/mt in Hangzhou. High prices deterred downstream producers from buying. In the afternoon, trading remained muted.
SMM surveyed 42 large aluminum ingot producers and traders in China.
An overwhelming majority (76%) of the companies surveyed are worried that spot aluminum prices will fall below RMB 14,600/mt this week for the following reasons. First, prices will fall as shipments continue to arrive. Second, SHFE 1311 aluminum contracts, prices of which are lower than those of SHFE 1310 aluminum contracts, will shift to the new current-month contract on Wednesday. This will send aluminum prices down. Third, demand is weak in normally high-demand October, also exposing aluminum prices to downward correction.
The remaining 24% expect spot aluminum prices to hold steady between RMB 14,600-14,640/mt. 1. Most of the goods that arrived after the weeklong holiday were bought by large producers, leaving limited aluminum ingot available in spot markets. Meanwhile, arrivals last week did not grow sharply, helping aluminum prices hold stable. 2. Downstream producers refrained from aggressive restocking after the Chinese National Day holiday on the belief that prices would fall. However, those processors may increase purchasing this week, keeping prices for the light metal stable.