Spot Aluminum Prices Struggle to Break Through Supply-Demand Constraints; Trading in South China Aluminum Market Shows Divergence [SMM South China Spot Aluminum Daily Review]

SMM December 17:

For aluminum ingots in South China, the average SMM A00 aluminum (Foshan) price on December 17 was 21,640 yuan/mt, up 120 yuan/mt on the day, at a discount of 215 yuan/mt against the front-month contract, widening by 5 yuan/mt from the previous day. A sharp decline in social inventory today supported suppliers to hold prices firm. However, driven by the core year-end need for destocking and cash flow, market willingness to sell remained strong, keeping circulation loose. Morning offers were mainly concentrated at -10 to 0 yuan/mt. Downstream rush to buy amid continuous price rise provided a floor, but the incomplete implementation of new long-term contracts dampened traders' purchase willingness, leading to weak initial transactions. Later, continued futures gains pushed offers to around +100 yuan/mt, prompting some buyers to replenish low-priced cargo, marginally improving transactions.

For aluminum billets in South China, on December 17, the processing fees for various specifications of SMM 6063 aluminum billets (Guangdong) were stable to lower. The average fee for Φ90/100 was 450 yuan/mt, while for Φ120 and above it was 400 yuan/mt, flat from the previous day , with price differences persisting in market quotes. A significant rise in the base price failed to spur downstream rush to buy amid continuous price rise. Enterprises prioritized securing low-priced cargo, resulting in limited overall demand. Subsequent offers were gradually lowered, leading to mixed transaction performance throughout the day, with processing fees lacking upward momentum.

Inventory side, on Wednesday, aluminum ingot and billet inventories in major consumption areas decreased by 10,500 mt and 2,000 mt WoW, respectively, with South China seeing destocking of 2,000 mt and 1,000 mt. Short term, the pullback in absolute prices supports sellers' willingness to hold prices firm, but weakening demand reduces downstream purchase willingness, and spot discounts are expected to fluctuate.