Stockpiling demand over the weekend helped spot premiums remain stable [SMM Spot Aluminum Midday Review]

SMM News on June 20

Today, SHFE aluminum prices moved higher in the morning session due to low aluminum ingot inventory and continued destocking. However, against the backdrop of the off-season, actual demand remained weak, and the futures market pulled back. In today's spot market, due to weekend stockpiling demand, trading activity slightly improved, but downstream purchase willingness remained low. In east China, the market offered goods at a premium of +5 yuan/mt over the SMM average price in the morning. Due to the lack of incremental demand during the off-season, market quotes and transactions were mostly concentrated at parity with the SMM price. Today, SMM A00 aluminum was reported at 20,720 yuan/mt, down 50 yuan/mt from the previous trading day, with a premium of 180 yuan/mt against the 07 contract, unchanged from the previous trading day.

In the central China market, due to weekend stockpiling demand, trading activity slightly improved in the morning session, and spot premiums held steady. The spot market was at parity with the SMM central China price, and the price spread with east China held steady. Today, SMM central China A00 aluminum was recorded at 20,560 yuan/mt against the SHFE aluminum 2507 contract, down 50 yuan/mt from the previous trading day. The price spread between central China and east China was 160 yuan/mt, unchanged from the previous trading day, with a premium of 20 yuan/mt against the 2507 contract.

On the inventory side, according to SMM's domestic aluminum ingot inventory data, domestic electrolytic aluminum ingot inventory stood at 312,500 mt on June 20, down 0.45 mt from the previous trading day. In the short term, the low arrival of aluminum ingots and the reduction in inventory are conducive to high spot premiums in the spot market. However, there is a strong fear of high prices in the spot market, and downstream purchase willingness is poor, leading to transactions at discounts. It is expected that spot premiums will show a narrowing trend in the short term.

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