Price spread between futures contracts narrowed significantly WoW, with spot cargo transactions mainly at a discount due to fear of high prices [SMM Spot Aluminum Midday Review]

Published: Jun 16, 2025 13:30

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[SMM Aluminum Spot Midday Review: Price Spread Between Futures Contracts Narrowed Significantly Compared to Last Friday, Spot Market Transactions Dominated by Discounts Due to Fear of High Prices] Inventory side, according to SMM's domestic aluminum ingot inventory data, domestic aluminum ingot inventory stood at 458,000 mt on June 16, with a destocking of 0.2 mt compared to the previous trading day. In the short term, the lower arrival of aluminum ingots and the reduction in inventory are conducive to high premiums in the spot market. In addition, the high premiums in east China and the Shanghai-Guangdong price spread attract cargo from south China to be transported to east China by water, but due to the long transportation cycle and limited volume, the impact on the market is limited.

SMM News on June 16

Today, the SHFE aluminum futures market showed a clear downward trend in the morning session. The price spread between the front-month and next-month contracts narrowed rapidly, with the price spread between futures contracts narrowing to 250 yuan/mt at the end of the first trading session, a decrease of 180 yuan/mt from last Friday. In east China, despite the downward trend in the futures market and the narrowing price spread between futures contracts in the morning session, downstream demand weakened during the off-season, and there was a strong fear of high prices. Market quotes were concentrated at a discount of 30 to 20 yuan/mt against SMM. Overall market transactions were sluggish. Today, SMM A00 aluminum was quoted at 20,630 yuan/mt, down 100 yuan/mt from the previous trading day, with a discount of 10 against the 06 contract, up 200 yuan/mt from the previous trading day.

In the central China market, suppliers offered discounts to sell in the morning session. The spot market saw discounts of 30 to 20 yuan/mt against SMM central China. As downstream industries entered the off-season, some plants announced production cuts last week, and overall demand was weak. Therefore, downstream purchase intentions were poor, with most transactions being long-term contracts, and almost no spot purchases were made. Today, SMM central China A00 aluminum was recorded at 20,520 yuan/mt against the SHFE aluminum 2506 contract, down 120 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was 110 yuan/mt, widening by 20 yuan/mt from the previous trading day, with a discount of 120 against the 2506 contract.

On the inventory side, according to SMM's domestic aluminum ingot inventory data, domestic aluminum ingot inventory was 458,000 mt on June 16, a decrease of 0.20 mt from the previous trading day. In the short term, the lower arrival of aluminum ingots and the reduction in inventory are conducive to high premiums in the spot market. In addition, the high premiums in east China and the Shanghai-Guangdong price spread have attracted cargo from south China to be transported to east China by water. However, due to the long transportation cycle and limited volume, the impact on the market is limited.

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