Destocking in east China supports spot premiums; downstream sectors purchase aluminum as needed amid high aluminum prices [SMM Spot Aluminum Midday Review]

SMM, May 20 Report

Today, SHFE aluminum fluctuated rangebound in the morning session. In terms of the spot market performance, aluminum prices rebounded to above 20,000 yuan/mt. Trading in east China and Gongyi markets was moderate, but the reduction in arrivals in east China provided support for spot premiums in the local market. However, downstream players purchased as needed amid high aluminum prices, and the upward momentum was slightly insufficient.

Specifically, trading in east China was moderate today, with overall purchasing as needed. Market transactions were concluded at premiums of +10 yuan/mt against the SMM average price. Today, SMM A00 aluminum was quoted at 20,210 yuan/mt, down 20 yuan/mt from the previous trading day, with a premium of 70 yuan/mt against the June contract, unchanged from the previous trading day.

In the central China market, shipments were relatively high today, and arrivals were expected to be moderate, with moderate trading. Today, transactions in the central China market were mainly concluded at small premiums against the SMM central China average price. SMM central China A00 aluminum was recorded at 20,140 yuan/mt against the SHFE aluminum 2506 contract, down 10 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was 70 yuan/mt, narrowing by 10 yuan/mt from the previous trading day, and it was on par with the 2506 contract.

On the inventory side, according to SMM's domestic aluminum ingot inventory data, the three-region inventory of domestic aluminum ingots was 457,500 mt on May 20, a destocking of 4,500 mt from the previous day. In the short term, with high aluminum prices and an increase in inventory arrivals, market transactions have slowed down, and the upward momentum for premiums is insufficient. It is expected that premiums and discounts will fluctuate rangebound in the subsequent period.

Data source: SMM

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