Social Inventory of Aluminum Ingots in Xinjiang Faces Shipping Obstacles, Destocking Occurs, Spot Discounts Narrow [SMM Spot Aluminum Midday Review]

SMM December 11 News:

The SHFE aluminum 2601 contract's trading center rose in the morning session. Due to transportation disruptions in Xinjiang, aluminum ingots accumulated in the region, leading to destocking in social inventory of aluminum ingots. Supply tightened in the spot market, spot transactions recovered, and spot discounts narrowed. In east China, market activity rebounded, with some traders purchasing to fulfill long-term contracts. Holders held prices firm and were reluctant to sell. Actual transactions were mainly at a premium of around 10 yuan/mt against the SMM average price, and spot discounts narrowed. Today, the selling sentiment index in the east China market was 2.82, up 0.11 WoW; the buying sentiment index was 2.73, up 0.1 WoW. SMM A00 aluminum closed at 21,890 yuan/mt, up 120 yuan/mt from the previous trading day, at a discount of 120 yuan/mt against the 2601 contract and a discount of 60 yuan/mt against the 2512 contract.

In the central China market today, major holders held prices firm and were reluctant to sell. Spot supply was tight, and traders' buying sentiment was strong, creating a situation where prices were quoted high but few transactions occurred. Quotations continued to rise. After prices reached a premium of 50 yuan/mt, major holders started selling, easing the scramble for goods. Ultimately, actual transaction prices ranged from a premium of 20 yuan/mt to a premium of 50 yuan/mt against the central China price. Today, the selling sentiment index in the central China market was 2.61, down 0.17 WoW; the buying sentiment index was 2.78, down 0.01 WoW. SMM central China aluminum closed at 21,820 yuan/mt, up 160 yuan/mt from the previous trading day, at a discount of 190 yuan/mt against the 2601 contract and a discount of 130 yuan/mt against the 2512 contract. The price spread between Henan and Shanghai was -70 yuan/mt, widening 40 yuan/mt from the previous trading day.

Inventory side, national aluminum ingot inventory totaled 584,000 mt on Thursday, down 11,000 mt from Monday. Aluminum ingot inventory continued to destock. Seasonal factors affected Xinjiang aluminum ingot transportation, causing some accumulation in Xinjiang. Aluminum ingot inventory is expected to destock slowly in the short term. In the short term, absolute prices pulled back, social inventory of aluminum ingots destocked, and traders are expected to hold prices firm to repair spot discounts, which are anticipated to narrow.