Social inventory buildup, weakening premium expectations amid slight inventory buildup, with generally sluggish market transactions [SMM Spot Aluminum Midday Review]

SMM, May 19 News

Today, SHFE aluminum fluctuated downward in the morning session, with a significant pullback in the opening center. The closing price during the first trading period was 20,155 yuan/mt. In terms of spot market performance, aluminum prices returned to above 20,000 yuan/mt, and trading activity in east China and Gongyi markets weakened, with a slight inventory buildup in the fundamental market.

Specifically, trading sentiment in east China weakened today, with transactions mainly driven by traders. Some aluminum smelters were actively delivering and selling, and subsequent market transactions reached a premium/discount of -10 yuan/mt against the contract. End-users reported a slowdown in orders, and raw materials were mainly purchased as needed. Today, SMM A00 aluminum was quoted at 20,230 yuan/mt, down 40 yuan/mt from the previous trading day, with a premium of 70 against the 06 contract, unchanged from the previous trading day.

In the central China market, there was a relatively large amount of cargo offered today, but transactions were difficult. Today's transactions in the central China market were mainly concentrated on cargo offered at a premium/discount of -20 to -10 yuan/mt against SMM central China, with transactions at -20 yuan/mt. SMM central China A00 aluminum was recorded at 20,150 yuan/mt against the SHFE aluminum 2506 contract, down 50 yuan/mt from the previous trading day. The price spread between central China and east China was 80 yuan/mt, widening by 10 yuan/mt from the previous trading day, with a discount of 10 against the 2506 contract.

In terms of inventory, according to SMM's domestic aluminum ingot inventory data, domestic aluminum ingot inventory stood at 585,000 mt on May 19, up 4,000 mt from the previous day. In the short term, with high aluminum prices and an increase in inventory arrivals, market trading activity has weakened, and there is insufficient upward momentum for premium increases. It is expected that premiums and discounts will remain in the doldrums in the subsequent period.

Data source: SMM

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