SHFE Aluminum Futures Market Volatile After Holiday, Overall Spot Aluminum Transactions Average [[SMM Spot Aluminum Midday Review]]

SMM News on May 6

Today, SHFE aluminum experienced significant fluctuations in the morning session. After oscillating, aluminum prices pulled back sharply. Although there was a slight rebound later, the price center had already fallen below 20,000 yuan/mt. In terms of the spot market performance, overall trading activity was moderate.

Specifically, in east China, there was an ample supply of spot aluminum, and downstream sentiment turned bearish again. Spot transactions were mainly at discounts. Early in the morning, the market gradually shifted from trading at the SMM average price to a -10 discount. SMM A00 aluminum was quoted at 19,850 yuan/mt, down 210 yuan/mt from the previous trading day. It was trading at a 20 yuan/mt discount to the May contract, down 10 yuan/mt from the previous trading day.

In the central China market, trading activity was moderate. Most transactions were conducted at the SMM average price, mainly because the inventory buildup in the Gongyi area after the holiday was lower than expected, and suppliers attempted to stand firm on quotes when selling. SMM central China A00 aluminum was recorded at 19,800 yuan/mt against the SHFE aluminum 2505 contract, down 210 yuan/mt from the previous trading day. The price spread between central China and east China was -50 yuan/mt, unchanged from the previous trading day. Actual market transactions were conducted at parity with the SMM central China price and at a 70 yuan/mt discount to the 2505 contract.

On the inventory side, according to SMM's domestic aluminum ingot inventory data, the three-region inventory of domestic aluminum ingots on May 6 was 636,000 mt, up 22,000 mt from the pre-holiday level. In the short term, with inventory buildup after the holiday and the transition between peak and off-peak seasons, downstream orders have slightly decreased, and bullish sentiment has resurfaced. It is expected that the inventory drawdown rate will slow down or inventory buildup will continue, with spot transactions mainly at discounts.

Data source: SMM

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