Trading sentiment rebounded, and the expansion of spot discounts in east China halted. [SMM Spot Aluminum Midday Review]

SMM November 7 News:

SHFE aluminum fluctuated in the morning session, hovering around 21,570 yuan/mt. In east China, high absolute prices dampened end-users' buying sentiment, with sporadic transactions concluded at a small discount to the SMM average price. However, as the price spread between futures contracts widened slightly, traders showed moderate purchasing enthusiasm, with good transactions concluded at parity to the SMM average price and sporadic deals done at a small premium to the SMM average price. Today, the east China market selling sentiment index was 2.97, up 0.10 MoM; the buying sentiment index was 2.87, up 0.09 MoM. SMM A00 aluminum closed at 21,540 yuan/mt, up 180 yuan/mt from the previous trading day, at a discount of about 30 yuan/mt against the 2511 contract, flat from the previous trading day.

Amid high aluminum prices, trading in the central China market was relatively sluggish today. Pre-market offers were mostly at a premium of 10 yuan to the central China price, but significant fear of high prices among downstream players led to limited purchases. Actual transaction prices mainly ranged from parity to a premium of 10 yuan against the central China price. Today, the central China market selling sentiment index was 2.89, flat MoM; the buying sentiment index was 2.87, down 0.01 MoM. SMM central China aluminum closed at 21,420 yuan/mt, up 180 yuan/mt from the previous trading day, at a discount of 150 yuan/mt against the November contract, flat from the previous trading day. The price spread between Henan and Shanghai was -120 yuan/mt, unchanged from the previous trading day.

Inventory side, aluminum ingot inventories in major consumption areas totaled 464,500 mt on Friday, down 4,000 mt WoW. In the short term, high prices are suppressing downstream cargo pick-up and stockpiling activities, and aluminum ingot inventories are expected to face slow destocking. Spot premiums and discounts are likely to remain under pressure in the near term.