Spot aluminum circulation tightened in the East China market, with premiums rising. [SMM Spot Aluminum Midday Review]

In the early session today, SHFE aluminum moved downwards after a higher opening, with the center shifting down to around 19,700 yuan/mt. In the spot market, spot premiums in east China rose as spot circulation tightened due to large buyers purchasing in the market. Supported by the previous spread funds, the backwardation structure of SHFE aluminum May-July contracts expanded to 170 yuan/mt, also providing support to the spot market. The market traded at a premium of 20 yuan/mt against the SMM A00 average price. SMM A00 recorded a premium of 50 yuan/mt against the SHFE aluminum 2505 contract, up 20 yuan/mt from the previous trading day. SMM A00 aluminum ingot prices were recorded at 19,830 yuan/mt, up 30 yuan/mt from the previous trading day.

After the rebound in aluminum prices in central China, downstream purchasing weakened, while upstream suppliers actively shipped goods, releasing some of the previous inventory. The market presented a completely different situation compared to east China, with spot premiums stabilizing during the day. SMM central China A00 recorded 19,780 yuan/mt against the SHFE aluminum 2505 contract, up 30 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was -50 yuan/mt. Actual market transactions were at parity to a discount of 10 yuan/mt against SMM central China prices and at parity against the 2505 contract.

Inventory-wise, SMM's weekly aluminum social inventory was recorded at 555,400 mt, a decrease of 10,400 mt. After the previous downward shift in aluminum prices, downstream restocking is expected to increase. Downstream processed material finished product inventories and warrant inventories have been digested to normal levels. After the contract rollover, suppliers stood firm on quotes, and with the support of large buyers purchasing, market premiums remained firm with upside room.

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