Holders in East China Refuse to Budge on Prices and Hold Back Sales, Spot Discounts Narrow [SMM Spot Aluminum Midday Review]

SMM Oct 30:

SHFE aluminum bottomed out in the morning session. In the first trading period, SHFE aluminum fluctuated downward, falling from around 20,250 yuan/mt to about 20,200 yuan/mt. In the second trading period, it rebounded to around 20,280 yuan/mt. In east China, the absolute high price fluctuated at highs. Traders refused to budge on prices and were reluctant to sell. Around market opening, quotations were at parity with the SMM average price, with poor sales enthusiasm. Later, actual transactions were at premiums of 10-20 yuan/mt against the SMM average price. Today, the east China market sales sentiment index was 3.03, up 0.11 WoW; the purchase sentiment index was 3.11, up 0.24 WoW. Today, SMM A00 aluminum was quoted at 21,200 yuan/mt, up 30 yuan/mt from the previous trading day, at a discount of about 10 yuan/mt against the 2511 contract, up 20 yuan/mt from the previous trading day.

In central China, before market opening, sales sentiment was high due to the night session rally. After opening, prices pulled back sharply, and suppliers slowed sales. High aluminum prices weakened downstream purchase willingness. Final transaction prices were around parity to a discount of 10 yuan/mt against the central China price. Today, the central China market sales sentiment index was 2.86, down 0.01 WoW; the purchase sentiment index was 2.80, down 0.01 WoW. SMM central China A00 aluminum was recorded at 21,060 yuan/mt, up 20 yuan/mt from the previous trading day, at a discount of 150 yuan/mt against the November contract, up 10 yuan/mt from the previous trading day. The Henan-Shanghai price spread was -140 yuan/mt, widening 10 yuan/mt from the previous trading day.

Inventory side, national aluminum ingot inventory totaled 619,000 mt on Thursday, destocking 7,000 mt WoW from last Monday. In the short term, high aluminum prices dampened downstream cargo pick-up enthusiasm. Spot transactions were expected to remain mainly at discounts.