East China Market Relatively Weak, Central China Shipment Sentiment Subdued [SMM Spot Aluminum Midday Review]

SMM June 4:

During the morning session, SHFE aluminum 2606 contract fluctuated downward, with the overall price center moving lower than the previous trading day. Wait-and-see sentiment was strong in the east China market, with some sellers holding back from selling, while buyer buying sentiment remained weak, and market transactions were relatively sluggish. Mainstream spot transaction prices were at a discount of 110-120 yuan/mt against the SHFE aluminum 06 contract. The shipment sentiment index in east China was 2.96 today, down 0.5 MoM; the procurement sentiment index was 2.65, down 0.5 MoM.

SHFE aluminum futures prices pulled back significantly during the night session and this morning's session. Combined with a large price spread between central China and Shanghai, suppliers in the central China market showed weak selling sentiment, preferring to wait for prices and premiums to recover before selling in bulk. However, the large price spread between central China and Shanghai increased arbitrage opportunities, boosting trader buying sentiment. Additionally, lower absolute prices led to a recovery in downstream processing enterprises' purchase willingness, and the overall market transaction atmosphere recovered. The actual transaction price range in the central China market ultimately settled at a discount of 220-240 yuan/mt against the SHFE aluminum 06 contract. The shipment sentiment index in central China was 2.87 today, down 0.02 MoM; the procurement sentiment index was 2.2, up 0.04 MoM.

Inventory side, aluminum ingot inventory in major consumption areas decreased 0.75 MoM today, with destocking mainly coming from Wuxi and Guangdong.