Destocking in east China Exceeds Expectations, Suppliers Strongly Refuse to Budge on Prices [SMM Spot Aluminum Midday Review]

SMM, May 22

Today, SHFE aluminum fluctuated in the morning session, with its center moving higher. From the perspective of the spot market performance, destocking exceeded expectations, providing support for local spot premiums. Amid high aluminum prices, downstream purchase willingness declined, while transactions among traders increased.

Specifically, trading sentiment was good in east China today. The relatively small arrival volume provided strong support for prices. Downstream purchase willingness weakened, but traders had a strong willingness to refuse to budge on prices due to low inventory. Moreover, due to the shortage of goods, suppliers were cautious in selling, and market transactions were mainly priced at SMM+10, with some at +20. Today, SMM A00 aluminum was quoted at 20,360 yuan/mt, up 50 yuan/mt from the previous trading day, with a premium of 80 against the 06 contract, up 10 yuan/mt from the previous trading day.

In the central China market, transactions were mainly concentrated on selling at the average SMM central China price today, with significant fluctuations in morning quotes. SMM central China A00 aluminum was recorded at 20,290 yuan/mt against the SHFE aluminum 2506 contract, up 50 yuan/mt from the previous trading day. The price spread between central China and east China was 70 yuan/mt, unchanged from the previous trading day, with a premium of 10 against the 2506 contract.

On the inventory side, according to SMM's domestic aluminum ingot inventory data, domestic aluminum ingot inventory stood at 557,000 mt on May 22, a destocking of 28,000 mt from Monday. In the short term, the relatively small arrival volume in east China is conducive to the rise of premiums and discounts. Follow-up attention should be paid to changes in demand.

Data source: SMM

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