SHANGHAI, Jan. 12 (SMM) –SHFE 1503 aluminum contract fell to its lowest since 2014 at RMB 12,755/mt as bearish sentiment gathered steam. However, the most active contract tracked LME aluminum up later in the week. In China’s spot market, falling prices did not trigger panic sell-off since arrivals were limited after the three-day New Year holiday. Many downstream buyers stayed out of the market, waiting for prices to fall further.
The rise in the most active SHFE aluminum contract was driven mainly by withdrawal of bears rather than entry of bulls. As such, the contract should remain weak between RMB 12,700-12,850/mt this coming week.
In China’s spot market, supply and demand will remain weak. Spot aluminum is expected to trade at discounts of RMB 0-20/mt and premiums of RMB 0-30/mt over SHFE front-month aluminum contract.