Futures market surged significantly, while downstream actual demand remained weak [SMM Spot Aluminum Midday Review]

SMM News on June 18

Today, the SHFE aluminum futures market fluctuated upward in the morning session, with a significant upward trend. However, the actual transaction premiums in the spot market narrowed. As the traditional off-season arrived, downstream buyers exhibited a significant fear of high prices and slowed down their procurement, making trading far from ideal. In east China, the market initially offered goods at the SMM average price in the morning. As the futures market surged, the spot premiums against the futures market narrowed and gradually shifted to offering at SMM-10. Traders reported that sales and transactions weakened today, with downstream purchase willingness being poor, and most transactions were executed under long-term contracts. Today, SMM A00 aluminum was reported at 20,900 yuan/mt, up 280 yuan/mt from the previous trading day, with a premium of 190 against the 07 contract, down 20 yuan/mt from the previous trading day.

In the central China market, suppliers once again offered goods at a significant discount in the morning session. The spot market offered at a discount of 30 to 20 yuan/mt against SMM central China prices. Buyers had a strong fear of high prices, and trading was sluggish, with the price spread against east China widening. Today, SMM central China A00 aluminum was recorded at 20,260 yuan/mt against the SHFE aluminum 2507 contract, up 260 yuan/mt from the previous trading day. The price spread between central China and east China was 150 yuan/mt, widening by 20 yuan/mt from the previous trading day, with a premium of 40 against the 2507 contract.

On the inventory side, according to SMM's data on aluminum ingot inventories in three domestic regions, domestic aluminum ingot inventories stood at 325,500 mt on June 18, a destocking of 0.60 mt from the previous trading day. In the short term, the lower arrival of aluminum ingots and the reduction in inventories are conducive to high spot premiums. However, given the strong fear of high prices in the spot market and poor downstream purchase willingness, the market is seeing transactions at discounts. It is expected that spot premiums will show a narrowing trend in the short term.

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