Discounts still prevailed in transactions across regions, with a slight improvement in trading volume on the weekend [SMM Spot Aluminum Lunchtime Review]

SMM News on July 4

Today, SHFE aluminum futures continued to fluctuate at highs in the morning session. As the market approached the 10:15 closing, futures prices declined rapidly, eventually closing at 20,790 yuan/mt. In the spot market of major consumption areas in the morning, transactions improved slightly as the weekend approached, but prices were generally traded at discounts to SMM. There was no significant improvement in downstream demand. Specifically, in east China, the market continued to offer goods at discounts of -20 to -10 yuan/mt against SMM in the morning. Overall downstream purchase willingness remained weak, and transactions gradually shifted from discounts of -10 yuan/mt to -20 yuan/mt against SMM. Today, SMM A00 aluminum was quoted at 20,770 yuan/mt, down 90 yuan/mt from the previous trading day, with a discount of 20 yuan/mt against the July contract, expanding by 10 yuan/mt from the previous trading day.

In the central China market, spot discounts improved slightly today, mainly due to the weekend approaching and downstream stockpiling and purchasing. Today, the spot market was traded at premiums of +20 and +30 yuan/mt against SMM central China, with the price spread against east China narrowing to -150 yuan/mt. Today, SMM central China A00 aluminum was recorded at 20,620 yuan/mt against the SHFE aluminum 2507 contract, down 60 yuan/mt from the previous trading day. The price spread between central China and east China was 150 yuan/mt, narrowing by 20 yuan/mt from the previous trading day, with a discount of 170 yuan/mt 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 321,000 mt on July 4, a destocking of 7,000 mt from the previous trading day. In the short term, despite the low aluminum ingot inventory, the increase in casting ingot production has supplemented market supply. Additionally, there is a strong fear of high prices in the spot market, coupled with poor downstream demand, significant production cuts, low purchase willingness, and discounted transactions. It is expected that spot discounts will continue to widen in the short term.

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