Inventory buildup of aluminum ingots during off-season, impacting spot market [SMM Spot Aluminum Midday Review]

SMM News on June 23: In the morning session, SHFE aluminum front-month contract jumped initially and then pulled back, with the futures market eventually falling below the daily average line of 2,050 yuan/mt, fluctuating rangebound. In east China, long-term contracts dominated market transactions, and spot trading was sluggish. On the day, with relatively high shipments, the market premium experienced a slight price collapse, with transactions occurring at a discount of 10 to 20 yuan/mt against SMM. Today, SMM A00 aluminum was reported at 20,650 yuan/mt, down 70 yuan/mt from the previous trading day, with a premium of 160 yuan/mt against the 07 contract, down 20 yuan/mt from the previous trading day.

In the central China market, amid the off-season atmosphere, production cuts by aluminum processing enterprises were increasingly frequent, with long-term contracts dominating market transactions and few spot orders being placed. After the morning market opening, shipments increased, and the discount widened again, with offers against the SMM average price falling to a discount of 20 to 30 yuan/mt. SMM central China A00 aluminum was recorded at 20,470 yuan/mt against the SHFE aluminum 2507 contract, down 90 yuan/mt from the previous trading day. The price spread between central China and SHFE was -180 yuan/mt, down 20 yuan/mt from the previous trading day, with a discount of 20 yuan/mt against the 2507 contract.

On the inventory side, SMM weekly inventory was recorded at 464,000 mt, up 15,000 mt MoM. Amid the off-season atmosphere, downstream processing materials producers adjusted finished product inventories through production cuts, and spot market demand was sluggish, with premiums expected to fall further.

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