Destocking of social inventory combined with downstream procurement led to transactions at a premium against the online price in many regions today [SMM Spot Aluminum Lunchtime Review]

SMM News on July 17

Today, during the first trading session of SHFE aluminum, the aluminum price fluctuated with a slight upward shift in its price center. The market transaction atmosphere improved, with many regions seeing transactions at premiums against the online prices, mainly due to a slight improvement in downstream purchase willingness and destocking of social inventory, which reduced shipments and supported price increases. Specifically, in east China, the market still offered shipments at +10 yuan/mt against the SMM average price in the early morning, and downstream purchase willingness improved, with most transactions occurring at SMM+10. Today, SMM A00 aluminum ingot was quoted at 20,570 yuan/mt, up 50 yuan/mt from the previous trading day, with a premium of 100 yuan/mt against the 2508 contract, an increase of 10 yuan/mt from the previous trading day.

In the central China market, transactions were mainly conducted at +10 yuan/mt against SMM central China prices in the early morning today. SMM learned that some downstream production lines in the central China region, which had previously undergone production cuts, have started to resume operations one after another. However, due to the lack of a significant improvement in demand, the overall increase in raw material purchases remains limited. The price spread between Henan and Shanghai maintained at 130 yuan/mt, with a discount of 30 yuan/mt against the 2508 contract.

In terms of inventory, according to SMM's domestic aluminum ingot inventory data, domestic aluminum ingot inventory stood at 466,000 mt on July 17, a destocking of 9,000 mt from the previous trading day. In the short term, with an increase in casting ingot production in the spot market and a replenishment of market supply, despite potential destocking due to uneven aluminum ingot arrivals during the week, combined with an assessment of in-transit cargoes, aluminum ingot inventory is expected to primarily experience inventory buildup. Additionally, the purchase sentiment in the spot market has eased somewhat, and spot premiums and discounts may fluctuate.

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