SHFE aluminum contract hit a high of RMB 15,790/mt: SMM Daily Review

The most active SHFE aluminum contract for October delivery started slightly higher at RMB 15,645/mt and hit a high of RMB 15,790/mt as shorts continued to take profits, strengthening even when other base metals weakened. Cautious longs and pressure at RMB 15,700/mt dragged the contract back to close at RMB 15,680/mt, up RMB 65/mt or 0.42%. Positions dropped 4,894 lots to 107,958 lots. SHFE aluminum climbed for a third successive trading day, but was also stopped at the 30-day moving average. Transacted contracts dropped further below 50,000 lots. SMM expects the most active SHFE aluminum contract to test support at RMB 15,600/mt for the near term.

Spot aluminum traded at RMB 15,700-15,720/mt in Shanghai, with discounts of RMB 50-70/mt over the current-month SHFE aluminum contract. Low-iron aluminum traded at RMB 15,800-15,820/mt. SHFE aluminum opened with the closing price of the previous trading day after LME aluminum prices dropped slightly a day earlier. It rebounded during later trading, but failed to push up spot prices, with spot discounts expanding to RMB 70/mt. Trader selling interest was strong but buying weak, so deals were quite limited. Spot trading turned even lighter in the afternoon as SHFE aluminum trimmed gains, with sparse quotations seen at RMB 15,690-15,700/mt. No deal was supported in the afternoon session as buying disappeared.