Pre-Holiday Stockpiling Sentiment Emerges in East China, Arrivals Increase in Central China with Weaker Transactions [SMM Spot Aluminum Midday Review]

SMM April 21 News

SHFE aluminum fluctuated in the morning session today. In the first trading session, aluminum prices opened slightly higher, influenced by the continued destocking of domestic aluminum ingot social inventory, but later the center shifted downward, still fluctuating above 19,800 yuan/mt. In the spot market, regional differences were observed. Specifically, spot premiums in east China continued to strengthen, with transactions at SMM+10 to +20, and market trading was active. This was mainly due to the continued destocking stimulating market transactions, and also because some traders reported that the current aluminum price level was moderate and the approaching Labour Day holiday led to pre-holiday stockpiling sentiment among downstream users and traders, promoting higher market transactions. SMM A00 aluminum was quoted at 19,910 yuan/mt, up 80 yuan/mt from the previous trading day, with a premium of 5-60 yuan/mt against the May contract, up 10 yuan/mt from the previous trading day.

Trading in central China turned sluggish, mainly due to the rebound in futures and increased arrivals. SMM central China A00 was recorded at 19,850 yuan/mt against the SHFE aluminum 2505 contract, up 70 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was -60 yuan/mt, with actual market transactions at parity to a discount of 10 yuan/mt against SMM central China prices, and at parity against the 2505 contract.

In terms of inventory, according to SMM domestic aluminum ingot inventory data, domestic aluminum ingot inventory in three regions stood at 673,000 mt on April 21, down 16,000 mt WoW. In the short term, fundamental destocking provides support for domestic aluminum prices, but macro uncertainties have led to cautious market sentiment. It is expected that aluminum prices will fluctuate considerably in the short term.

Data source: SMM

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