Intraday Sudden Shift to Inventory Buildup, Premium Takes Another Hit [SMM South China Spot Aluminum Daily Review]

SMM, August 13:

Futures turned sharply lower today, while the South China spot market remained weak. Inventory accumulated again after four months, somewhat dampening expectations for the market outlook, and bearish sentiment gradually emerged. With both absolute prices and the spot-futures price spread weakening, holders briefly tried to hold prices firm but failed, then generally cut prices and sold more to cash out promptly. Mainstream quotations were at discounts of 20 yuan/mt to parity, and the glut in circulation was no different from that during yesterday’s sharp rally. Demand side, downstream buyers gradually bought on dips while standing on the sidelines, though buying interest was not high. Traders still bought less and sold more, with only as-needed purchases, which created a clear drag. Both supply and demand were weak, and overall transactions were poor. Spot transaction prices were concentrated at premiums of 65 yuan/mt to 105 yuan/mt over the SHFE aluminum 2608 contract.