Metals News
Will Widening Aluminum Price Gap between Guangdong and Shanghai Offer Arbitrage Room? SMM Reports
smm insight
Jun 27,2017

SHANGHAI, Jun. 27 (SMM) – Aluminum premiums in Guangdong over Shanghai have expanded to around 130 yuan/tonne recently, SMM learned. 

What caused the price spread to widen? Will this offer room for arbitrage?

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The price gap between these two major markets was just 40-80 yuan/tonne earlier. Aluminum billet in Guangdong has gained much more favor than aluminum ingot recently. As such, smelters reduced shipments to Guangdong, pushing down stocks there and allowing local suppliers to hold offers firm, SMM explained. 

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However, freight charges between Guangdong over Shanghai are about 120 yuan/tonne at present, leaving little room for arbitrage, SMM noted. 

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