Market supply tightens, suppliers hold firm on premiums [SMM Spot Aluminum Midday Review]

SMM News on May 28: In the morning session today, the center of aluminum prices shifted slightly higher, fluctuating rangebound around RMB 20,200 yuan/mt. In east China, as inventory levels have continued to decline recently, suppliers generally showed strong reluctance to budge on prices. Currently, there are fewer in-transit cargoes in east China, coupled with a small amount of stockpiling by downstream consumers ahead of the Dragon Boat Festival, leading to a renewed increase in spot premiums. The market traded on par with to RMB 10 yuan/mt above the SMM average price. Today, SMM A00 aluminum was quoted at RMB 20,350 yuan/mt, up RMB 150 yuan/mt from the previous trading day, with a premium of RMB 100 yuan/mt against the June contract, an increase of RMB 10 yuan/mt from the previous trading day.

In the central China market, suppliers held firm on prices at around a RMB 10 yuan/mt premium in the morning session. Consumption in central China showed a weakening trend, with downstream purchasing power continuing to decline. However, in-transit cargoes in the market also decreased MoM, resulting in a situation of weak supply and demand. Coupled with a small amount of stockpiling by downstream consumers ahead of the Dragon Boat Festival, the market basically traded on par with the SMM central China price. SMM central China A00 aluminum was recorded at RMB 20,280 yuan/mt against the SHFE aluminum 2506 contract, up RMB 160 yuan/mt from the previous trading day. The price spread between central China and east China was -RMB 70 yuan/mt, an increase of RMB 10 yuan/mt from the previous trading day, with a premium of RMB 30 yuan/mt against the 2506 contract.

On the inventory side, as of May 28, the inventory of aluminum ingots in three domestic regions was 405,500 mt, a decrease of 8,500 mt. A combination of downstream stockpiling ahead of the holiday and low expected arrivals has led to tightening supply in the spot market, with spot premiums expected to remain high ahead of the holiday.

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