High aluminum prices inhibited inventory reduction, putting pressure on spot discounts [SMM Spot Aluminum Midday Review]

In the early trading session today, the most-traded SHFE aluminum contract slightly dipped before fluctuating upwards. In the East China region, sellers were primarily shipping goods, with moderate transaction volumes. According to SMM statistics, aluminum ingot inventory in Wuxi (excluding Hangzhou, Changzhou, Haian, etc.) was 262,400 mt, down by 1,900 mt from the previous trading day. Spot discounts slightly widened, with SMM A00 aluminum prices showing a discount of about 120 yuan/mt against the 2406 contract, flat compared to the previous trading day. The spot price recorded 21,070 yuan/mt. In the second trading session, the prices shifted upwards. In the East China region, mainstream transactions were at a discount of 10 yuan/mt to a premium of 10 yuan/mt against SMM A00 aluminum prices.

Today's spot transactions in the Central China were moderate, with spot supply relatively sufficient. Downstream procurement was mainly based on rigid demand. According to SMM statistics, the aluminum ingot inventory in Gongyi today was about 102,800 mt, an increase of 700 mt compared to the previous trading day. Today, the SMM Central China price had a discount of around 220 yuan/mt against the 2406 contract, up 10 yuan/mt from the previous trading day. The average spot price recorded 20,970 yuan/mt. The mainstream spot transactions in the early session were at a discount of 20 yuan/mt to a premium of 20 yuan/mt against the SMM Central China price.

Overall, according to SMM data, the aluminium inventory was 781,000 mt on Monday, an increase of 14,000 mt from last Thursday. Recently, high aluminium prices inhibited the pick-up of aluminum ingots to some extent. Last week, the pick-up of aluminum ingots from warehouses decreased by 12,500 mt WoW, and the inventory showed some fluctuations. Although the import window for primary aluminium remained closed, the actual inflow of imported sources into the domestic market is limited. The bonded inventory continues to accumulate, but the resumption of production in Yunnan is progressing, leading to an increase in arrivals. Meanwhile, orders in multiple sectors have shown slight signs of declining. In the past two weeks, aluminum ingots continuously accumulated, putting pressure on short-term spot discounts. The spot market may still maintain a discount trend in the short term.