SHFE Aluminum Stabilizes at Highs, Inventory Destocking Supports Discount Narrowing [SMM Aluminum Spot Midday Review]

SMM August 12:

The SHFE aluminum 2608 contract continued to run at high levels in morning trading. Wuxi saw more warehouse withdrawals, relatively less inbound shipments due to weather issues, and relatively active trading among traders. Today, SHFE aluminum spot premiums mainly transacted in the range of 8-10 yuan/mt to SHFE 08 contract +10 yuan/mt. In east China today, the selling sentiment index was 3.17, up 0.02 DoD; the buying sentiment index was 3.26, up 0.06 DoD.

Aluminum futures prices rose for multiple consecutive days, keeping buying sentiment in the central China market sluggish. Downstream processing enterprises, constrained by insufficient off-season orders and high in-factory inventory as well as elevated aluminum prices, kept buying sentiment at low levels with a further weakening trend. As aluminum prices rose and premiums eased somewhat, suppliers' willingness to sell recovered slightly. Actual transaction prices in the central China market eventually centered around a discount of 100-140 yuan/mt against the SHFE aluminum 08 contract. Today in central China, the selling sentiment index was 3.09, up 0.03 DoD; the buying sentiment index was 2.93, down 0.01 DoD.

Inventory-wise, aluminum ingot inventory in major consumption areas dropped 13,500 mt WoW today, with destocking seen in Guangdong and Wuxi.