During the early trading session today, the most-traded SHFE aluminum contract climbed to around 19,950 yuan/mt, with the futures market breaking above the 5-day moving average. Aluminum prices had been declining for several days, prompting downstream restocking at lower prices. Coupled with the rapid narrowing of the price difference between primary metal and scrap, domestic social inventory continued to decline. Specifically, suppliers in east China saw a drop in their inventories, and the weekend effect led to a narrowing of the discount against the futures market to around 20 yuan/mt against the SMM average price. Today, the SMM A00 spot price was at a discount of 100 yuan/mt against the SHFE aluminum 2501 contract, up 20 yuan/mt from the previous trading day. SMM A00 aluminum ingot prices stood at 19,830 yuan/mt, up 150 yuan/mt from the previous trading day.
In the central China market, the futures market has seen a significant decline recently, leading to a sharp reduction in long-term contract demand and a focus on spot transactions. Suppliers' inventories have decreased, and the market's available supply remains tight. The Henan-Shanghai price spread further narrowed to a discount of around 60 yuan/mt. The SMM central China A00 price against the SHFE aluminum 2501 contract was recorded at 19,770 yuan/mt, up 170 yuan/mt from the previous trading day, with actual market transactions at a premium of around 30 yuan/mt against the SMM central China price.
Regarding inventory, according to SMM's daily inventory data for three regions, as of December 20, daily destocking reached 11,600 mt, bringing the total inventory to 369,700 mt. Recently, aluminum prices have generally shifted lower, while downstream new orders have increased, leading to inventory destocking across the country. After the rebound in premiums and discounts, they stabilized. However, as aluminum prices rebounded, the pace of downstream raw material inventory consumption may slow, and premiums in east China are unlikely to continue rising next week.
Source: SMM
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