Aluminum Prices Fall Again with Improved Trading, Spot Premiums/Discounts in Central China Rebound [SMM Spot Aluminum Midday Review]

SMM November 18 news:

SHFE aluminum December contract mainly fluctuated downward in the morning session, with its center declining to around 21,450 yuan/mt. In east China, as the absolute price fell further, purchasing sentiment recovered, but downstream wait-and-see sentiment increased, and no large-scale restocking occurred yet. Actual transactions were mostly around parity against the SMM average price. Today, the east China market selling sentiment index was 3.1, up 0.02 MoM; the buying sentiment index was 3.01, up 0.1 MoM. SMM A00 aluminum was offered at 21,460 yuan/mt, down 170 yuan/mt from the previous trading day, at a discount of 30 yuan/mt against the December contract, flat from the previous day.

As aluminum prices pulled back, both selling and buying sentiment in central China recovered significantly today. Downstream restocking sentiment warmed slightly, boosting transactions in the trader market. However, as aluminum prices were below the monthly average, suppliers showed a clear willingness to hold prices firm. Final transaction prices were mainly between a premium of 10 yuan/mt to 20 yuan/mt against the central China price. Today, the central China market selling sentiment index was 2.92, flat MoM; the buying sentiment index was 2.95, up 0.02 MoM. SMM central China aluminum closed at 21,340 yuan/mt, down 150 yuan/mt from the previous trading day, at a discount of 150 yuan/mt against the December contract, up 20 yuan/mt from the previous day. The price spread between Henan and Shanghai was -120 yuan/mt, up 20 yuan/mt from the previous day.

Inventory side, total aluminum ingot inventory in major consumption areas was 492,500 mt on Tuesday, an inventory buildup of 1,500 mt WoW. As aluminum prices fell further, market trading sentiment recovered. Improved transactions are expected to provide momentum for stronger premiums and discounts. However, recent aluminum ingot inventory buildup is expected to suppress spot premiums/discounts. Short-term spot premiums/discounts are expected to fluctuate mainly.