The spot market transactions in east and central China were moderate, with a slight narrowing of the discount [SMM Aluminum Spot Market Midday Review]

This morning, the most-traded SHFE aluminum contract fluctuated upwards after the opening, and rebounded after dipping in the second trading session. In the spot market in east China, trading enthusiasm slightly improved, and transactions were moderate, with spot discounts narrowing slightly. According to SMM statistics, aluminum ingot inventory in Wuxi (excluding Hangzhou, Changzhou, Haian, etc.) was 256,800 mt today, an increase of 2,200 mt from the previous trading day. On July 3, the SMM A00 spot aluminum price had a discount of 60 yuan/mt against the 2407 contract, an increase of 10 yuan/mt from the previous trading day, with the spot price recorded at 20,290 yuan/mt. Mainstream transactions in east China had a discount of 10 yuan/mt to a premium of 10 yuan/mt against SMM A00 aluminum price.

Today, transactions in central China were moderate, with a slight tightening of spot market supply and narrowing spot discounts. According to SMM statistics, aluminum ingot inventory in Gongyi today was about 85,600 mt, down 3,200 mt from the previous trading day. Today, the SMM Central China price had a spot discount of around 150 yuan/mt against the 2407 contract, up 20 yuan/mt from the previous trading day. The average spot price recorded was 20,200 yuan/mt, with mainstream spot transactions in the early session ranging from a discount of 10 yuan/mt to a premium of 10 yuan/mt against the SMM central China price.

Overall, according to SMM data, aluminum inventory on July 1 was 769,000 mt, up 6,000 mt WoW. Currently, aluminum prices retreated slightly from previous levels, but as the off-season for downstream demand gradually approached, the PMI for processing enterprises remained below the threshold in June. In July, the off-season atmosphere is more pronounced, and demand is weakening. On the supply, the overall trend still shows a slight increase, with no reduction in supply. Last week, aluminum ingot pick-up from warehouses decreased WoW, making destocking difficult. As of June 3, social inventory of aluminum ingots is 260,000 mt higher than the same period in 2023 and even higher than the same period in 2022. The market has sufficient supply, and spot discounts may persist in the short term.