Supply tightens in east China, market premium remains firm [SMM Spot Aluminum Midday Review]

SMM reported on May 14: In the morning session today, the center of SHFE aluminum prices continued to rise, breaking through the 20,300 yuan/mt mark. In east China, as inventory levels have been destocking recently and expectations for subsequent arrivals are low, suppliers generally have a strong sentiment to stand firm on quotes. Additionally, major players and the market are purchasing at premiums, keeping market premiums firm, mainly at a premium of 10-20 yuan/mt against SMM transactions. Today, SMM A00 aluminum was quoted at 20,350 yuan/mt, up 140 yuan/mt from the previous trading day, with a premium of 60 yuan/mt against the May contract, up 40 yuan/mt from the previous trading day.

In the central China market, the center of aluminum prices moved higher, and suppliers' profits increased significantly. During the day, most suppliers, seeking to cash in, faced a price collapse in premiums and discounts, with transactions against SMM central China prices at a discount of 20-30 yuan/mt. SMM A00 central China was recorded at 20,290 yuan/mt against the SHFE aluminum 2505 contract, up 110 yuan/mt from the previous trading day. The price spread between central China and east China was -60 yuan/mt, on par with the 2505 contract.

On the inventory side, as of May 15, the domestic weekly inventory of aluminum ingots was 581,000 mt, representing a destocking of 20,000 mt WoW. Currently, due to varying premiums across regions, issues such as tight supplies of some cross-regional arbitrage cargoes and aluminum scrap, supply and demand in some regions have tightened, and premiums have temporarily remained high. However, as aluminum prices continue to stay elevated, this will suppress downstream consumption, limiting the upside potential for premiums.

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