Premiums in east China continue to narrow, with market focused on cargo shipments [SMM Spot Aluminum Midday Review]

SMM, June 6

Today, SHFE aluminum futures fluctuated in the morning session. The impact of yesterday's Sino-US tariff developments was not evident in the futures market. The fundamental factors were mixed, leading to overall market volatility.

In terms of spot market performance, the spot market in east China weakened, with market participants focusing on selling. High premiums continued to pull back. Early in the morning, transactions were concluded at a discount of 10 yuan/mt to the SMM average price, and later, most transactions were also concluded at this level. Today, SMM A00 aluminum ingot prices were reported at 20,230 yuan/mt, down 20 yuan/mt from the previous trading day, with a premium of 80 yuan/mt against the June contract, narrowing by 10 yuan/mt from the previous trading day.

In the central China market, transactions were concluded at the SMM central China average price today. However, downstream feedback indicates weakening demand, with production cuts occurring sequentially. Against the backdrop of weak supply and demand, premiums are expected to weaken further. SMM A00 aluminum in central China was recorded at 20,170 yuan/mt against the SHFE aluminum 2506 contract, down 20 yuan/mt from the previous trading day. The price spread between central China and east China was 60 yuan/mt, unchanged from the previous trading day, with a premium of 20 yuan/mt against the 2506 contract.

Regarding inventory, according to SMM's domestic aluminum ingot inventory data, the domestic aluminum ingot inventory across three regions stood at 371,000 mt on June 6, down 10,000 mt from yesterday. 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 demand during the off-season. Against the backdrop of weak supply and demand, holders are actively selling, and premiums and discounts are expected to pull back mainly.

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