[SMM analysis] the aluminum base difference in Guangdong still has room to strengthen after the demand base is changed to the month.

Published: May 15, 2020 19:49

On Friday, Shanghai aluminum futures first suppressed and then rose, with the main contract price center of gravity rising slightly from 12400 yuan / ton to 12600 yuan / ton. During the week, the spot price of Guangdong aluminum ingots fell first and then rose. Although it once fell below 12800 yuan / ton in the middle of the week, it was still able to return to above 13000 yuan / ton on Friday. Due to the expiration and delivery of the Shanghai Aluminum 2005 contract, the aluminum base difference in Guangdong has narrowed from 110 yuan / ton to near Pingshui during the week.

Spot end, on Friday (May 15) Guangdong aluminum ingot inventory of 216900 tons, down 26500 tons from the end of April, the increase in storage in early May decreased, the speed of storage slowed down significantly. However, the output of Guangdong aluminum ingots this week is close to 60,000 tons, still higher than the same period last year, the downstream purchase volume is still objective, the processing enterprises are full of orders to be produced, and the demand side has the support to the spot price. On the futures side, the Shanghai aluminum index rose nearly 100 yuan, but the overall pattern was nearly strong and far weak, and the monthly contract difference fluctuated greatly in recent months. Among them, the difference between 2005 and June is 150-300 yuan / ton, and the difference between 06 and July is 180-260 yuan / ton. 05 contract activity is not high, more affected by the long single point price, and 06 contract faces more spot hedging pressure, the increase is less than the 05 contract. In addition, the recent Guangdong market began to circulate part of the Southeast Asian aluminum ingots, the import window continues to open, the subsequent import of aluminum ingots will also be incremental, the far month contract also has a certain selling pressure.

Strong reality and weak expectations, Shanghai aluminum near strong and far weak structure will continue. When the contract fell sharply in recent months on Wednesday, the spot price of Guangdong aluminum ingots against 06 contract was as low as 120 yuan / ton, but then rapidly expanded to about 200 yuan / ton, considering that the number of warehouse receipts continued to decrease. In addition, there is a certain gap in the spot long orders between traders before the 25th, so there is still room for Guangdong aluminum base difference to strengthen after the month change.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or to learn more information, please contact: lemonzhao@smm.cn
For more information on how to access our research reports, please contact:service.en@smm.cn
Related News
Fed Governor Milan Pushes for Over 100 Basis Points Cut, Contradicts Barkin on Caution
21 hours ago
Fed Governor Milan Pushes for Over 100 Basis Points Cut, Contradicts Barkin on Caution
Read More
Fed Governor Milan Pushes for Over 100 Basis Points Cut, Contradicts Barkin on Caution
Fed Governor Milan Pushes for Over 100 Basis Points Cut, Contradicts Barkin on Caution
Federal Reserve Governor Milan pointed out that it is necessary for the US Fed to cut interest rates by more than 100 basis points this year. At the same time, he is very much looking forward to the performance of Kevin Warsh as Fed Chairman. However, Richmond Fed President Barkin emphasized that monetary policy must remain cautious until inflation fully pulls back to the target level, thereby ensuring the stability of the labour market.
21 hours ago
Democratic Senators Demand Delay in Fed Nomination Amid Criminal Investigation
21 hours ago
Democratic Senators Demand Delay in Fed Nomination Amid Criminal Investigation
Read More
Democratic Senators Demand Delay in Fed Nomination Amid Criminal Investigation
Democratic Senators Demand Delay in Fed Nomination Amid Criminal Investigation
All 11 Democratic members of the US Senate Banking Committee jointly sent a letter to the committee's chairman, Tim Scott, requesting that all nomination processes for the prospective Fed Chairman, Kevin Warsh, be postponed until the criminal investigation into current Fed Chairman Powell and other board members is concluded. However, Scott stated that Warsh's confirmation was a done deal.
21 hours ago
Fed to Keep Large Banks' Capital Levels Unchanged, Postpones Stress Test Reforms Until 2027
21 hours ago
Fed to Keep Large Banks' Capital Levels Unchanged, Postpones Stress Test Reforms Until 2027
Read More
Fed to Keep Large Banks' Capital Levels Unchanged, Postpones Stress Test Reforms Until 2027
Fed to Keep Large Banks' Capital Levels Unchanged, Postpones Stress Test Reforms Until 2027
The US Fed has announced that it will maintain the capital levels of large banks unchanged during the upcoming stress test cycle (corresponding to the 2026 cycle). At the same time, the US Fed is planning multidimensional reforms to this annual test, aiming to enhance its transparency. The US Fed's Vice Chair for Supervision, Bowman, revealed that adjustments to the stress capital buffer requirements for large banks will be postponed until 2027. This move is intended to provide the US Fed with sufficient time to evaluate potential flaws that may be exposed in its testing models when assessing banks' financial conditions under simulated economic downturn scenarios.
21 hours ago
[SMM analysis] the aluminum base difference in Guangdong still has room to strengthen after the demand base is changed to the month. - Shanghai Metals Market (SMM)