Aluminum Futures Prices Pull Back, Premiums Rise [SMM Spot Aluminum Midday Review]

SMM Jun 8:

Driven by stronger-than-expected US non-farm payrolls data, which reinforced expectations for US interest rate hikes, the US dollar index rose, pushing SHFE aluminum lower under pressure. The SHFE aluminum 2606 contract fluctuated downward in the morning session, with the overall price center falling sharply from the previous trading day. Buying sentiment in east China recovered somewhat as the decline in aluminum prices prompted downstream users to buy on dips. Mainstream spot transaction prices were at discounts of 80–100 yuan/mt against the SHFE aluminum 06 contract. The east China shipment sentiment index stood at 2.85, down 0.06 from the previous trading day, while the buying sentiment index was at 3.00, up 0.16 from the previous trading day.

With a pullback in aluminum futures prices today, suppliers in central China significantly strengthened their sentiment to hold prices firm and hold back from selling, keeping quoted premiums high. However, after heavy stockpiling by downstream processing enterprises last week, most are still digesting inventories, and buying sentiment today edged lower from last Friday. Actual transaction prices in central China were mainly at discounts of 130–150 yuan/mt against the SHFE aluminum 06 contract. Today, the central China shipment sentiment index was 2.87, up 0.01 from the previous trading day, while the buying sentiment index was 2.20, down 0.02 from the previous trading day.

Inventory-wise, aluminum ingot inventories in major consumption regions rose 0.75 WoW today, with the buildup mainly driven by Wuxi.