Price Pullback Stimulates Transactions, Strong Performance of Spot Cargo in Central China [SMM Spot Aluminum Midday Review]

SMM, May 9

Today, SHFE aluminum fluctuated in the morning session, with the price center pulling back during the session. The closing price in the first trading session was 19,610 yuan/mt. In terms of the spot market performance, the price decline stimulated downstream procurement sentiment. The discounts in the east China and Gongyi markets narrowed. Specifically, spot aluminum in the Gongyi market continued to rise today, narrowing the price spread with east China to 0.

Specifically, the trading sentiment in east China was moderate today. Some traders reported an increase in shipments, and the market generally stood firm on quotes. However, transactions were not as smooth as yesterday. In the morning, inquiries revealed that transactions in the east China market were concentrated at prices of SMM+10 yuan/mt, with some brands trading at SMM+20 yuan/mt. Today, SMM A00 aluminum was quoted at 19,610 yuan/mt, down 10 yuan/mt from the previous trading day, at parity with the 05 contract, narrowing by 10 yuan/mt from the previous trading day.

In the central China market, shipments increased today, but supply was tight. Suppliers stood firm on quotes. Transactions in the central China market today were concentrated at prices of SMM central China +20 and +30 yuan/mt. SMM central China A00 aluminum was recorded at 19,610 yuan/mt against the SHFE aluminum 2505 contract, up 10 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was 0 yuan/mt, narrowing by 20 yuan/mt from the previous trading day, and at parity with the 2505 contract. The price spread between Shanghai and Henan narrowed, and some supply may enter the Gongyi market. Subsequent attention should be paid to the inhibitory effect of increased supply on premiums and discounts.

On the inventory side, according to SMM's domestic aluminum ingot inventory data, the domestic inventory of aluminum ingots in three regions was 487,400 mt on May 9, a destocking of 13,200 mt from yesterday. In the short term, the post-holiday aluminum price correction has stimulated spot transactions, narrowing spot discounts. However, subsequent attention should still be paid to the impact of changes in end-use demand due to the shift between peak and off-peak seasons downstream.

Data source: SMM

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