Supply tight in east China, suppliers holding firm to premiums [SMM Spot Aluminum Midday Review]

SMM News on June 11: In the morning session today, the center of SHFE aluminum prices continued to break through upwards, rising above the narrow fluctuation range near 20,300 yuan/mt. Cargo availability was tight in east China, and suppliers took the opportunity to maintain high premiums. The main reasons were as follows: 1. Fewer in-transit cargoes were expected; 2. The spot market was in a state of ultra-low inventory; 3. Major players purchased at high premiums in the market. The market traded at a premium of 20-30 yuan/mt against the SMM average price. Today, SMM A00 aluminum was quoted at 20,400 yuan/mt, up 240 yuan/mt from the previous trading day, with a premium of 90 yuan/mt against the June contract, up 20 yuan/mt from the previous trading day.

In the central China market, despite low inventory, suppliers still maintained high premiums, with offers ranging from a premium of 10 yuan/mt to parity. However, cargo availability in the actual central China market was not tight. Due to the strong sentiment of suppliers holding back cargoes amid low inventory, shipments began to increase during the day as the center of aluminum prices continued to rise. Entering June, shipments from downstream processed material enterprises have almost continued to decline, and finished product inventories have begun to accumulate. Some enterprises have gradually started to cut production, and differences have emerged between buyers and sellers. SMM central China A00 aluminum was recorded at 20,350 yuan/mt against the SHFE aluminum 2506 contract, up 250 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was -50 yuan/mt, up 10 yuan/mt from the previous trading day, with a premium of 40 yuan/mt against the 2506 contract, up 30 yuan/mt from the previous trading day.

On the inventory side, SMM's daily inventory across three locations was recorded at 344,500 mt, down 11,900 mt MoM. It is expected that there will still be upside room for premiums before the contract rollover amid low inventory. Currently, the Shanghai-Guangdong price spread has widened to 170 yuan/mt, and the cross-regional arbitrage window has opened again. Keep an eye on the cargo transfer situation in south China.

》Subscribe to view SMM's historical spot metal prices