Center of gravity pulled back in the morning session, with improvement in just-in-time procurement in the market [SMM Spot Aluminum Midday Review]

SMM News on June 10: In the morning session today, the center of SHFE aluminum prices dipped to around 20,500 yuan/mt, before reversing in a V-shaped trend and rising again above 20,100 yuan/mt. In east China, after the futures market declined, market purchasing sentiment improved. Coupled with major players purchasing in the market, the market traded at parity to a premium of 10 yuan/mt against SMM transactions, with premiums and discounts firming up. Today, SMM A00 aluminum was quoted at 20,160 yuan/mt, down 50 yuan/mt from the previous trading day, with a premium of 70 yuan/mt against the June contract, unchanged from the previous trading day.

In the central China market, supply was tight, and despite low inventory, suppliers maintained high premiums. Coupled with the pullback in the futures market's center, offers ranged from a premium of 10 yuan/mt to parity. However, downstream processed material enterprises saw a nearly continuous decline in shipments since entering June. Finished product inventories have begun to accumulate, and some enterprises have gradually started to cut production. There is still an expectation of a decline in premiums. SMM central China A00 aluminum was recorded at 20,100 yuan/mt against the SHFE aluminum 2506 contract, down 50 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was -60 yuan/mt, unchanged from the previous trading day, with a premium of 10 yuan/mt against the 2506 contract, unchanged from the previous trading day.

On the inventory side, SMM's daily inventory across three locations was recorded at 35.64, down 1,000 mt MoM. Under a high backwardation structure and with consumption gradually entering the off-season, there is an expectation of an increase in in-transit volumes, and premiums will continue to face downward pressure. However, it is expected that inventory will hover at a low level for an extended period, with relatively limited downward speed and space for premiums. Attention should be paid to the price spread between futures contracts after contract rollover.

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