Destocking Fails to Support Stable Premiums and Discounts, High Aluminum Prices Lead to Weaker Premiums and Discounts [SMM Spot Aluminum Midday Review]

SMM October 22 news:

SHFE aluminum's early trading center mainly rose, climbing to around 20,980 yuan/mt. Overall, aluminum ingot destocking provided some support to spot premiums/discounts, but with high aluminum prices, downstream purchasing was weak; amid the tug-of-war, spot premiums/discounts weakened slightly. In east China, around market opening, suppliers mainly quoted at the average price, with average transactions; coupled with stronger aluminum prices, actual transactions were mainly at a discount of about 10 yuan/mt against the SMM average price. Today, the east China market selling sentiment index was 3.19, down 0.09 MoM; buying sentiment index was 3.12, down 0.13 MoM. Today, SMM A00 aluminum was quoted at 20,980 yuan/mt, up 10 yuan/mt from the previous trading day, at parity against the 2511 contract, down 10 yuan/mt from the previous trading day.

In central China, spot transactions were average today; with aluminum prices strengthening, downstream selling increased slightly, but downstream buying sentiment weakened, with some downstream feedback indicating longer payment periods, orders on hand declined somewhat, and demand sustainability needs assessment; actual transactions were mainly at a discount of 10 yuan/mt to parity against the SMM average price. Today, the central China market selling sentiment index was 2.77, up 0.01 MoM; buying sentiment index was 2.66, down 0.02 MoM. SMM central China A00 recorded 20,860 yuan/mt, up 10 yuan/mt from the previous trading day, at a discount of 120 yuan/mt against the November contract, down 10 yuan/mt from the previous trading day. The central China-east China price spread held flat MoM at -120 yuan/mt.

Inventory side, Wednesday's total aluminum ingot inventory in major consumption areas was 463,000 mt, destocking 6,000 mt MoM. In the short term, with high absolute aluminum prices, spot premiums/discounts are expected to face resistance to rising.