Spot markets stabilized in many regions today, with absolute prices correcting and downstream purchases showing slight improvement [SMM Spot Aluminum Lunchtime Review]

SMM News on July 16

Today, SHFE aluminum fluctuated between 20,400-20,470 yuan/mt during the first trading session. After the pullback in the aluminum price center over the past two days, the market transaction atmosphere improved, and downstream purchase willingness slightly picked up, driving the stabilization of spot premiums/discounts in mainstream consumption areas for the week. Specifically, in east China, the market still offered goods at +10 yuan/mt above the SMM average price in the morning, and downstream purchase willingness improved somewhat, with most transactions occurring at SMM+10 today. Today, SMM A00 aluminum ingot prices were reported at 20,520 yuan/mt, up 10 yuan/mt from the previous trading day, with a premium of 90 yuan/mt against the 2508 contract, up 40 yuan/mt from the previous trading day. This was mainly due to the approaching contract rollover. There was no significant improvement in the fundamental supply and demand situation, and the promotional effect of relatively low prices on demand still needed to be verified.

In the central China market, transactions were mainly conducted at +10 yuan/mt above the SMM central China average price in the morning, gradually shifting to transactions at the average price later. This was mainly because, on the one hand, there was sufficient cargo supply, and on the other hand, downstream production cuts had not yet recovered, with no significant improvement in actual demand. The price spread between Henan and Shanghai remained at 140 yuan/mt, with a discount of 50 yuan/mt against the 2508 contract.

In terms of inventory, according to SMM's data on aluminum ingot inventory in three domestic regions, domestic aluminum ingot inventory stood at 335,500 mt on July 16, a destocking of 6,500 mt from the previous trading day. In the short term, the casting ingot volume in the spot market has increased, and market cargo supply has been somewhat replenished. Although destocking may occur due to uneven aluminum ingot arrivals during the week, considering in-transit cargoes, aluminum ingot inventory will still mainly experience inventory buildup. Moreover, the off-season sentiment in the spot market is strong, with poor downstream demand and many production cuts, making it difficult for purchases to see a qualitative improvement. Spot premiums/discounts in the market may fluctuate.

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