SMM Aluminum Price Forecast (Aug. 22-26)

SHFE 1111 aluminum contract prices edged lower after SHFE 1111 aluminum contracts became the most actively traded contract on Monday due to the situation where stronger near-term contracts and weaker forward contracts prevailed in the SHFE aluminum market. Daily trading volumes of SHFE 1111 aluminum contract were below 150,000 lots due to cautious trading sentiment, and most deals were made by investors in an attempt to minimize risks, with prices mainly moving between RMB 17,000-17,450/mt over the past week. Low spot aluminum inventories helped support SHFE aluminum prices, but a lack of confidence caused investors to mainly made short-term transactions, which dampened upward momentum in SHFE aluminum prices. In this context, SMM expects SHFE aluminum prices to find support at RMB 17,000/mt in the short term.

Cargo-holders were reluctant to sell goods due to tight supply and since spot aluminum prices fell below RMB 18,000/mt early last week. As a result, spot aluminum premiums surged to positive RMB 200/mt over SHFE current-month aluminum contract prices after transitioning into a new contract month, which helped spot aluminum prices remain stable above RMB 17,700/mt. However, downstream buying interest was still low and most downstream consumers stayed out of the market once aluminum prices climbed above RMB 17,800/mt, keeping trading sentiment muted.