Decline in aluminum prices stimulates downstream purchasing sentiment, with better trading activity in the market today [SMM Spot Aluminum Midday Review]

SMM, May 8

Today, SHFE aluminum opened in the morning session, continuing to hover near the lows of 19,400 yuan/mt from last night's night session. Downstream buyers showed high enthusiasm for buying the dip, coupled with the destocking of social inventory stimulating a rebound in the futures market. The closing price during the first trading session returned to 19,630 yuan/mt. In terms of the performance of the spot market, the price decline stimulated downstream purchasing sentiment, and the spot discounts narrowed in the east China and Gongyi markets.

Specifically, the trading sentiment in the east China region was good today. In the morning, transactions were concluded at the average market price in east China. Later, suppliers' sentiment to stand firm on quotes strengthened, with transactions concentrated at SMM+10 yuan/mt, and some brands were traded at SMM+20 yuan/mt. Today, SMM A00 aluminum was quoted at 19,620 yuan/mt, up 10 yuan/mt from the previous trading day, with a discount of 10 yuan/mt against the May contract, narrowing by 10 yuan/mt from the previous trading day.

In the central China market, supply was tight today. Some hedging positions were sold at a premium, coupled with the decline in the futures market. Today, transactions in the central China market were concentrated at SMM central China+20 and +30 for shipping. SMM central China A00 aluminum was recorded at 19,600 yuan/mt against the SHFE aluminum 2505 contract, up 40 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was -20 yuan/mt, narrowing by 30 yuan/mt from the previous trading day, with a discount of 30 yuan/mt against the 2505 contract.

In terms of inventory, according to SMM's domestic aluminum ingot inventory data, domestic aluminum ingot inventory was 620,000 mt on May 8, a destocking of 16,000 mt from yesterday. In the short term, the post-holiday correction in aluminum prices has stimulated spot transactions, narrowing spot discounts. However, it is still necessary to monitor the impact of the weakening of downstream orders due to the shift between peak and off-peak seasons.

Data source: SMM

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