[SMM analysis] after the festival, the price difference between East China and Shanghai may continue to narrow.

Shanghai aluminum futures rose again this week, the main contract operating range of 12300-12700 yuan / ton, the price center of gravity moved up nearly 400 yuan, Guangdong spot performance is slightly weaker, Monday low at 12720 yuan / ton, Wednesday high price of 13010 yuan / ton, an increase of about 300 yuan. Guangdong aluminum ingot stocks were 243400 tonnes on Thursday, down about 40, 000 tonnes from the previous week and down 196600 tonnes, or 44.68 per cent, from a year-on-year high of 440000 tonnes on March 24. However, with the end of pre-holiday stock in the lower reaches of Guangdong, the market began to see a decline, the pace of receiving by traders slowed, and the spread between Guangdong and Shanghai narrowed from a high of 230 yuan / ton on Friday to a low of 150 yuan / ton on Thursday. This week, the spread between Guangdong and Shanghai fell from a high of 230 yuan / ton on Friday to a low of 150 yuan / ton on Thursday.

Since the sharp expansion of the price gap between Guangdong and Shanghai last week, there is room for arbitrage between the two places, and some traders have begun to receive goods in East China and ship them to Guangdong to earn the difference, which has also pushed up spot prices in East China to a certain extent. According to the spot transaction price difference of 150-170 yuan / ton between Guangdong and Shanghai before noon on Thursday (April 30), the shipping period from Shanghai to Guangdong is 5-7 days. If the short barge from Wuxi is added about 2 days, including the loading and unloading time, the actual warehouse door-to-door transportation time is close to 10 days. From April 24, Guangdong and Shanghai price spread to 220-240 yuan / ton, to the end of the holiday on May 6, nearly two weeks is enough time to transfer some of the spot aluminum ingots from East China to public warehouses in Guangdong. The cost of warehouse door to door is about 110 yuan, there is floating space up and down, the container in the north is tight, the shipping cost of going south will be more expensive than that of going north.

During the week, the Guangdong market is worried about the high base spread continues to deepen, the sharp fluctuation of the monthly difference has caused some holders to clear the stock source one after another, waiting for the rising water to return to the replenishment after the festival, in addition, there is still a long time to continue to implement after the festival. However, due to the high proportion of aluminum and water in the upstream electrolytic aluminum plant, Guangdong aluminum ingots will not arrive too much before and after the May Day holiday, which also limits the downward space for Guangdong aluminum base difference. It is expected that the price gap between Guangdong and Shanghai will continue to narrow at 30-50 yuan / ton after the festival, and Guangdong spot will also maintain the state of rising water before delivery.