Market trading gradually becomes sluggish, putting pressure on spot premiums [SMM Spot Aluminum Midday Review]

SMM News on May 26: In the morning session today, the center of the SHFE aluminum front-month contract continued to rise, hovering rangebound near 20,250 yuan/mt. In east China, as inventory levels have been destocking recently, suppliers generally showed strong reluctance to budge on prices. However, downstream buying interest weakened overall, and the market traded at a premium of 10 yuan/mt against SMM spot aluminum, with trading activity gradually turning sluggish. Today, SMM A00 aluminum ingot prices were reported at 20,350 yuan/mt, down 20 yuan/mt from the previous trading day, with a premium of 90 yuan/mt against the June contract, up 10 yuan/mt from the previous trading day.

In the central China market, suppliers held firm at a premium of around 10 yuan/mt in the morning session. However, as shipments increased but buying interest weakened further, market transactions slipped to a discount of 10 yuan/mt to parity against SMM spot aluminum in central China. Currently, consumption in central China is showing a weakening trend, and spot premiums are expected to remain under pressure. SMM A00 aluminum in central China was recorded at 20,270 yuan/mt against the SHFE aluminum 2506 contract, down 30 yuan/mt from the previous trading day. The price spread between central China and Shanghai was -80 yuan/mt, down 10 yuan/mt from the previous trading day, with a premium of 10 yuan/mt against the 2506 contract.

On the inventory side, as of May 26, the domestic weekly inventory of aluminum ingots was 534,000 mt, a decrease of 23,000 mt. Domestic social inventory continued to destock, with suppliers holding firm at high premiums, but this was slightly out of sync with actual consumption. The destocking of aluminum ingots was mainly due to a reduction in inbound shipments. It is expected that some inventory will be converted into unreported inventory, and spot premiums will gradually come under pressure and weaken.

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