Spot aluminium prices surged significantly, and cautious buying led to a widening of spot discounts

In the early trading session today, the most-traded SHFE aluminum contract fluctuated downward. In the east China, sellers were primarily selling their stocks due to a significant overnight price surge, leading to a substantial increase in aluminum prices. Downstream buyers were cautious, resulting in sluggish transactions. According to SMM statistics, aluminum ingot inventory in Wuxi (excluding Hangzhou, Changzhou, Haian, etc.) was 258,200 mt, a decrease of 4,200 mt from the previous trading day. Spot discounts widened, with today's SMM A00 spot aluminum price showing a discount of around 150 yuan/mt against the 2406 contract, down 30 yuan/mt from the previous trading day. The spot price recorded 21,710 yuan/mt, up 640 yuan/mt from the previous trading day. In the second trading session, the prices shifted downward, and sellers adjusted their prices in line with the market to offload stocks. In the east China, mainstream transactions were at a discount of 20 yuan/mt to a premium of 10 yuan/mt against the SMM A00 spot aluminum price.

Today, spot transactions in the central China were average. Spot supply was relatively sufficient, aluminum prices were high, and downstream sentiment for purchasement was weak. According to SMM statistics, aluminum ingot inventory in the Gongyi area was about 99,300 mt today, a decrease of 3,500 mt compared to the previous trading day. Today, the SMM central China price had a discount of around 330 yuan/mt against the 2406 contract, down 110 yuan/mt from the previous trading day. The average spot price recorded was 21,530 yuan/mt, up 560 yuan/mt from the previous trading day. Mainstream spot transactions in the early session had a discount of 20 yuan/mt to a premium of 10 yuan/mt against the SMM central China price.

Overall, according to SMM data, the aluminium inventory was 781,000 mt on Thursday, up 14,000 mt from a week ago and flat from Monday. Recently, aluminium prices remained above 21,000 yuan/mt for three consecutive days. Weak sentiment for receiving goods inhibited the pick-up of aluminum ingots from warehouses, leading to a continuous inventory accumulation. Although the import window for primary aluminium remained closed, limiting the actual inflow of imported sources into the domestic market and boosting bonded inventory, the production resumption in Yunnan is progressing, resulting in an increased arrival of aluminum ingots. Additionally, there are signs of a slight decline in orders across multiple sectors, and the production of ingots increased. Over the past two weeks, aluminum ingots continuously accumulated, putting pressure on short-term spot premiums and suggesting that spot discounts may persist in the short term.