Under the off-season atmosphere, spot premiums for aluminum continue to decline [SMM Spot Aluminum Midday Review]

SMM reported on July 8: In the morning session, the center of SHFE aluminum's front-month contract shifted down to around 20,630 yuan/mt before staging a small V-shaped reversal to around 20,670 yuan/mt. East China continued to experience inventory buildup, with market arrivals increasing, resulting in a buyer's market with complete oversupply. Despite the downward shift in aluminum price center, downstream inquiries increased, but market transactions still traded at a discount of 20 yuan/mt against SMM. Today, SMM A00 aluminum was quoted at 20,600 yuan/mt, down 40 yuan/mt from the previous trading day, trading at a discount of 50 yuan/mt against the July contract, down 20 yuan/mt from the previous trading day.

The central China market saw slightly weaker trading activity compared to the previous trading day. Against the backdrop of some cargo being redirected to surrounding areas of central China and large traders hoarding warrants in the market to mitigate the risk of short squeezes on the July contract, after experiencing several consecutive days of trading at a premium against the central China average price, the market activity in central China began to pull back amid the off-season atmosphere, with transactions trading at a premium of 20 yuan/mt against the SMM central China average price. SMM central China A00 aluminum was recorded at 20,480 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 -120 yuan/mt, narrowing by 10 yuan/mt from the previous trading day, and trading at a discount of 170 yuan/mt against the 2507 contract.

On the inventory side, SMM's daily inventory was recorded at 332,000 mt, up 4,000 mt MoM. Amid the off-season atmosphere, inventory accumulated as expected, and with the price spread between futures contracts structure remaining firm, spot premiums continued to face downward pressure.

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