Spot aluminium premiums expanded as downstream consumers restocked

SHANGHAI, May 6 (SMM) – East China spot aluminium premiums expanded on the first trading day after the five-day Labour Day holiday, as downstream consumers needed to replenish their stocks.

Wider spot premiums came despite a jump in futures prices. The front-month aluminium contract on the Shanghai Futures Exchange for May delivery surged more than 1% to a seven-week peak of 12,920 yuan/mt in morning trade.

In the physical markets, quotes were heard at 12,970-12,990 yuan/mt in Shanghai and Wuxi on Wednesday morning, up about 190 yuan/mt from April 30, the last trading day before the holiday. Premiums over the SHFE May contract came in at 80-100 yuan/mt, compared to 60-80 yuan/mt on April 30.

Sharply higher prices, however, sidelined some buyers and limited the overall spot trading volume.

The premiums of the SHFE May aluminium contract over the June contract remained firm at 120-180 yuan/mt, indicating tightness in near-term supply.

SMM data showed that social inventories of primary aluminium ingots in China extended their decline over the holiday, falling 32,000 mt from Thursday April 30 to 1.172 million mt as of Wednesday May 6.