Downstream enters off-season, high premium pulls back [SMM Spot Aluminum Midday Review]

SMM, June 5

Today, SHFE aluminum futures fluctuated downward in the morning session. The destocking of aluminum ingot inventory at the opening provided upward momentum for futures. However, against the backdrop of the off-season, the spot market weakened, with average trading volumes. The market traded on expectations of the off-season, with bulls cutting production, causing the futures market to decline.

In terms of spot market performance, the spot market in east China performed average, with a focus on selling. High premiums continued to pull back, and early in the morning, the market traded at -10 yuan/mt against the SMM average price. Today, SMM A00 aluminum was quoted at 20,250 yuan/mt, down 30 yuan/mt from the previous trading day, with a premium of 90 yuan/mt against the June contract, narrowing by 10 yuan/mt from the previous trading day.

In the central China market, transactions today were at -10 yuan/mt against the SMM central China average price, with downstream transactions concentrated at -10 yuan/mt. SMM central China A00 aluminum was recorded at 20,190 yuan/mt against the SHFE aluminum 2506 contract, down 40 yuan/mt from the previous trading day. The price spread between central China and east China was 60 yuan/mt, widening by 10 yuan/mt from the previous trading day, with a premium of 60 yuan/mt against the 2506 contract.

On the inventory front, according to SMM's domestic aluminum ingot inventory data, domestic aluminum ingot inventory stood at 504,000 mt on June 5, a destocking of 15,000 mt from Tuesday. In the short term, the lower arrival of goods is conducive to maintaining premiums. However, downstream acceptance of high premiums has decreased, coupled with weakening off-season demand. Sellers are actively selling, and premiums and discounts are expected to pull back mainly.

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