Continued destocking ahead of delivery; premiums keep rising [SMM Spot Aluminum Midday Review]

SMM, October 12:

Intraday SHFE aluminum futures center moved higher compared with the previous trading day, but weekend warehouse withdrawals in east China were relatively strong. Currently, the SHFE aluminum 2610-2611 contract structure is in backwardation of around 100 yuan/mt, and tomorrow the market is expected to quote against the SHFE aluminum 2611 contract at a premium of nearly 200 yuan/mt. Today, SMM A00 aluminum ingot transactions were concluded at a premium of 50-70 yuan/mt.

SHFE aluminum futures rebounded, while downstream processing enterprises saw sluggish end-user order demand and high in-factory inventory, resulting in weak willingness to purchase and restock. Trading sentiment in the central China market remained sluggish today. Suppliers were also not inclined to hold prices firm, and market quotes continued to move lower. Ultimately, actual transaction prices in the central China market were centered around a discount of 20-50 yuan/mt against the SHFE aluminum October contract.