Downstream Consumption Shows Slight Improvement, Spot Prices Remain Stable [SMM Spot Aluminum Midday Review]

This morning, the center of SHFE aluminum front-month contract shifted downward to around 20,850 yuan/mt. In the spot market, the absolute price center in east China also moved lower, with no significant improvement in market transactions. Deals were concluded at around SMM A00 aluminum ingot prices minus 10 yuan/mt, while downstream maintained just-in-time procurement. SMM A00 aluminum ingot was quoted at a discount of 60 yuan/mt to the SHFE 2504 contract, down 10 yuan/mt from the previous trading day's 04 contract quotation. SMM A00 aluminum ingot prices stood at 20,790 yuan/mt, down 30 yuan/mt from the previous trading day.

In the central China market, aluminum prices were previously at high levels, leading to an accumulation of finished product inventories among downstream processing enterprises and cautious restocking of raw materials. Spot premiums were under pressure. Recently, as aluminum prices moved lower, downstream just-in-time procurement increased. However, due to market trade risks, liquidity weakened in the central China market, and spot premiums faced resistance. SMM central China A00 aluminum ingot prices were quoted at 20,660 yuan/mt against the SHFE 2504 contract, down 30 yuan/mt from the previous trading day. The price spread between Henan and Shanghai stood at -130 yuan/mt, with actual transactions in the market ranging from parity to minus 10 yuan/mt against SMM central China prices.

In terms of inventory, SMM's weekly aluminum social inventory recorded 862,000 mt, flat WoW as of last Thursday. Previously, aluminum prices remained high at around 20,800 yuan/mt, and downstream processing enterprises faced inventory pressure due to slower cargo pick-up by end-users. Raw material inventories were mainly traded on a just-in-time basis, while outflows from warehouses in major consumption areas declined. As aluminum prices moved lower, trading activity slightly improved during the day. Attention should be paid to downstream enterprises' restocking activities, as the center of spot premiums is expected to recover.

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