Relatively Small Price Spread Between Henan and Shanghai, Lower Buying Sentiment Among Downstream Players in Central China Market [SMM Spot Aluminum Midday Review]

SMM May 26 update:

During the morning session, the SHFE aluminum 2606 contract fluctuated downward, with the overall price center moving lower compared to the previous trading day. Affected by the decline in aluminum prices, some sellers held prices firm. Combined with the recent low aluminum prices, buyer buying sentiment picked up, and the overall market trading atmosphere improved. The mainstream spot quotation in the market was around SMMA00 average price to +10 yuan/mt. Today, the east China market shipment sentiment index was 3.04, down 0.02 MoM; the procurement sentiment index was 3.17, up 0.01 MoM.

Recently, the Henan-Shanghai price spread was relatively small and higher than long-term contract prices. Downstream processing enterprises in the central China market had low buying sentiment and preferred long-term contract settlement, with overall market transactions being rather sluggish. Additionally, aluminum prices surged at the market opening, and suppliers offered lower quotes with weak willingness to hold prices firm. Ultimately, the actual transaction price range in the central China market hovered between a premium of 20 yuan and a discount of 30 yuan to the central China price. Today, the central China market shipment sentiment index was 2.82, down 0.02 MoM; the procurement sentiment index was 2.25, down 0.01 MoM.

Inventory side, aluminum ingot inventory in major consumption areas rose by 500 mt MoM today, with the inventory buildup mainly originating from Guangdong and Gongyi.