Spot aluminum transactions have weakened significantly, with premiums pulling back and market discounts improving [SMM Spot Aluminum Midday Review]

SMM News on June 17

Today, the SHFE aluminum futures market opened with volatile trading. The price spread between futures contracts led to a high premium of over 200 yuan/mt against the futures market after contract rollover. However, as it is the traditional off-season, downstream production cuts have weakened purchase capabilities. Both east China and central China markets generally saw discounted shipments, with market transactions turning sluggish. In east China, the market initially offered shipments at SMM-20 and -30 discounts, mainly due to weakened off-season demand from downstream sectors combined with fear of high prices. Later, as spot premiums against the futures market narrowed, shipments gradually shifted to being offered at the SMM average price. Today, SMM A00 aluminum was reported at 20,620 yuan/mt, down 10 yuan/mt from the previous trading day, with a premium of 210 against the 07 contract, up 220 yuan/mt from the previous trading day.

In the central China market, suppliers offered large discounts for shipments in the morning session. The spot market saw discounts of 30 to 20 yuan/mt against SMM central China prices. Some downstream plants announced production cuts, and buyers exhibited strong fear of high prices, resulting in very sluggish transactions. Suppliers once again lowered their discounts for shipments. Today, SMM central China A00 aluminum was recorded at 20,490 yuan/mt against the SHFE aluminum 2507 contract, down 30 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was 130 yuan/mt, widening by 20 yuan/mt from the previous trading day, with a premium of 80 against the 2507 contract.

On the inventory side, according to SMM data on aluminum ingot inventories in three domestic regions, domestic aluminum ingot inventories stood at 331,500 mt on June 17, showing a destocking of 0.20 mt from the previous trading day. In the short term, with fewer arrivals and destocking of aluminum ingot inventories, it is conducive to high spot premiums. However, the spot market is experiencing strong fear of high prices, with poor purchase willingness from downstream sectors and transactions occurring at discounts. It is expected that spot premiums will show a narrowing trend in the short term.

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