The futures market experienced a significant pullback, and suppliers' willingness to sell weakened. [SMM Spot Aluminum Midday Review]

SMM March 28 News

Last night's night session saw a sharp decline, and the morning session continued to operate at a low level. Aluminum prices fell significantly during the day, and suppliers were reluctant to sell at low prices.

Specifically, traders in east China showed weaker sentiment for selling, with the market offering SMM A00 at parity and +10 yuan/mt. Today, SMM A00 was at parity with the SHFE aluminum 2504 contract, with SMM A00 aluminum ingot prices recorded at 20,620 yuan/mt, down 190 yuan/mt from the previous trading day. In central China, due to the futures market pullback, the market stood firm on quotes, with SMM central China A00 recorded at 20,540 yuan/mt against the SHFE aluminum 2504 contract, down 170 yuan/mt from the previous trading day, and the price spread between Henan and Shanghai was -80 yuan/mt.

Inventory-wise, according to SMM's domestic aluminum ingot social inventory data, on March 28, the inventory of aluminum ingots in mainstream consumption areas in China was 668,000 mt, with a destocking of 3,400 mt MoM. In the short term, against the backdrop of the peak season and the continued growth trend in aluminum usage for new energy, social inventory is expected to continue destocking. Additionally, arrivals in mainstream consumption areas such as Wuxi are relatively low, providing support for aluminum prices. However, due to downstream concerns about high prices, the narrowing of premiums and discounts is relatively slow. Moreover, recent macro weakness and risk-averse capital positions should be monitored.

Data source: SMM

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