Spot aluminium premiums held firm despite a jump in futures

SHANGHAI, Apr 23 (SMM) – While an oil rebound spurred a jump in aluminium futures, premiums for spot aluminium prices in China over futures held firm on Thursday morning, supported by strong demand and falling inventories.

With premiums of 40-50 yuan/mt over the May contract on the Shanghai Futures Exchange, spot aluminium was quoted at 12,470-12,480 yuan/mt in east China’s Shanghai and Wuxi in morning trade, up more than 200 yuan/mt from Wednesday morning.

As an overnight oil comeback soothed nerves, base metals on the SHFE opened higher across the board on Thursday, and the May aluminium contract jumped more than 1%.

Chart 1: East China A00 aluminium prices and premiums over the SHFE May contract

Source: SMM

Meanwhile, south China’s spot aluminium market further outperformed the eastern one, as premiums of Guangdong spot aluminium prices over Shanghai expanded to 100-120 yuan/mt in morning trade, compared to 50-60 yuan/mt in the previous day.

Tight availability caused by robust demand and weak arrivals contributed to the strong performance in south China’s spot aluminium market.

SMM data showed that social inventories of primary aluminium ingots in China dropped 136,000 mt this week, and the loss in south China accounted for 43,000 mt.

Chart 2: Guangdong spot aluminium prices and premiums over Shanghai

Source: SMM

Spot aluminium trades in east and south China remained brisk on Thursday morning as a major trader continued its aggressive purchasing.