Spot Aluminum Price Center Declines, Downstream Restocking Rebounds, Spot Discounts Narrow [SMM Spot Aluminum Midday Review]

This morning, the center of SHFE aluminum front-month contract fell below 27,000 yuan/mt, with prices in some regions already lower than the monthly long-term contract execution price. In the spot market, the absolute price center in the east China market moved downward, market transactions improved slightly, downstream just-in-time restocking increased, and transactions were concentrated at parity to 10 yuan/mt against SMM A00 aluminum. SMM A00 aluminum was at a discount of 50 yuan/mt against the SHFE 2504 contract, up 10 yuan/mt from the previous trading day. SMM A00 aluminum ingot recorded 20,590 yuan/mt, down 200 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 raw material restocking. Recently, as aluminum prices moved downward, downstream just-in-time procurement increased. However, the proportion of funds tied up in downstream finished product inventories remained high, and restocking volumes did not see a significant increase, with spot premiums only slightly recovering. SMM central China A00 aluminum recorded 20,480 yuan/mt against the SHFE 2504 contract, down 180 yuan/mt from the previous trading day. The Henan-Shanghai price spread stood at -120 yuan/mt, with actual market transactions concentrated at parity to a premium of 10 yuan/mt against SMM central China prices.

In terms of inventory, SMM daily aluminum social inventory recorded 710,700 mt, a decrease of 8,700 mt. Previously, aluminum prices remained at a high level near 20,800 yuan/mt, and downstream processing enterprises faced inventory pressure due to slower cargo pick-up by end-users, with raw material inventories mainly driven by just-in-time transactions. Outflows from warehouses in major consumption regions declined. As aluminum prices moved further downward, market transactions slightly improved during the day. Attention should be paid to restocking activities by downstream enterprises, as the center of premiums is expected to continue returning to normal levels.

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