Aluminum Ingot Destocking Transactions Recover, East China Spot Premiums/Discounts Continue to Strengthen [SMM Spot Aluminum Midday Review]

SMM November 21:

The SHFE aluminum December contract's trading center pulled back to around 21,320 yuan/mt. In east China, aluminum ingot destocking was significant mid-week, coupled with falling futures prices, sellers mainly quoted with small premiums. Approaching the weekend, downstream users made just-in-time procurement, and spot trading volume was moderate. However, under the declining trend, market purchasing became more cautious. Actual transactions mainly hovered around parity to a premium of 10 yuan/mt against the SMM average price, without further strengthening. Today, the east China market selling sentiment index was 3.11, flat WoW; the buying sentiment index was 3.10, up 0.01 WoW. SMM A00 aluminum closed at 21,380 yuan/mt, down 190 yuan/mt from the previous trading day, at parity against the December contract, up 10 yuan/mt from the previous trading day.

Trading in the central China market was relatively sluggish today. Transaction prices were higher before the market open, and suppliers with hedging positions had significant selling volume. Being close to the settlement date, selling sentiment improved noticeably, with a tendency to lower premiums/discounts to boost trading volume. However, due to factors like the upcoming signing of year-end long-term contracts, major players still held prices firm. Downstream factories' purchase willingness was low, with transaction prices around a discount of 10 yuan against the central China price, leading to a decline in buying sentiment among purchasing traders. Ultimately, actual transaction prices in the central China market ranged from a discount of 10 yuan to a premium of 20 yuan against the central China price. Today, the central China market selling sentiment index was 2.96, up 0.02 WoW; the buying sentiment index was 2.94, down 0.05 WoW. SMM central China aluminum closed at 21,290 yuan/mt, down 190 yuan/mt from the previous trading day, at a discount of 90 yuan/mt against the December contract, up 10 yuan/mt from the previous trading day. The Henan-Shanghai price spread was -90 yuan/mt, flat from the previous trading day.

Inventory side, total aluminum ingot inventory in major consumption areas was 457,500 mt on Friday, destocking 12,500 mt WoW.Market trading sentiment recovered, transactions improved, aluminum ingot inventories destocked, and premiums/discounts strengthened. However, as the off-season deepens and the proportion of liquid aluminum pulls back, aluminum ingots still face the risk of inventory buildup during the off-season. Short-term spot premiums/discounts are expected to fluctuate.