SHFE aluminum Soars in Current Month, Sluggish Trading in Spot Market Amid Rising Price Spread between Futures Contracts [SMM Spot Aluminum Midday Review]

SMM News on June 13: Overnight, the SHFE aluminum front-month contract surged rapidly above 20,800 yuan/mt under the influence of increased long positions. The price center shifted higher again in the morning session, breaking through 20,900 yuan/mt. The price spread between the June and July contracts widened to b430 yuan/mt. In east China, morning market quotes revolved around a premium of 20-30 yuan/mt against the SMM average price. As the price spread between the front-month and next-month contracts widened further, the market entered a state of high prices but low trading activity, with widespread discounts against the SMM average price and sluggish buying interest. Today, SMM A00 aluminum ingot prices were reported at 20,730 yuan/mt, up 80 yuan/mt from the previous trading day, with a discount of 210 yuan/mt against the June contract and a premium of 270 yuan/mt against the July contract.

In the central China market, suppliers followed the price-holding strategy of east China in the morning session, with market quotes revolving around a premium of 10 yuan/mt to parity against the SMM average price. However, due to the high absolute prices, downstream buying interest was almost non-existent, and market trading activity hit rock bottom. The premium subsequently collapsed, with quotes against the SMM average price falling to discounts of 20-30 yuan/mt. SMM central China A00 aluminum was recorded at 20,640 yuan/mt against the SHFE aluminum 2506 contract, up 50 yuan/mt from the previous trading day. The price spread between central China and Shanghai was -90 yuan/mt, down 30 yuan/mt from the previous trading day, with a discount of 300 yuan/mt against the 2506 contract.

On the inventory side, SMM's daily inventory was recorded at 334,500 mt, down 4,500 mt MoM. After the contract rollover, the price spread is expected to narrow somewhat, but with low inventory levels, premiums are expected to remain relatively firm. Currently, the Shanghai-Guangdong price spread has widened to 170 yuan/mt, reopening the window for inter-regional arbitrage, and cargoes will be gradually transported to east China by water. According to SMM, cargoes transferred from south China in early June have been arriving in recent days, but the volume is not significant, resulting in limited impact on the market.

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