Pre-weekend Stockpiling Cycle, Buying Sentiment in Central and East China Rebounds MoM [SMM Spot Aluminum Midday Comment]

SMM July 10:

The center of the SHFE aluminum 2606 contract moved higher in early trading than the same period of the previous trading day. Driven by rising aluminum prices, selling sentiment today edged up from the previous trading day. Overall downstream purchasing sentiment increased recently from the prior week, supported by stockpiling ahead of Friday. Transactions were at parity to a premium of 20 yuan/mt against the SHFE aluminum July contract. The East China selling sentiment index was 3.04 today, up 0.06 from the previous trading day; the purchasing sentiment index was 3.10, up 0.06 from the previous trading day.

Today, purchasing sentiment in the central China market rebounded slightly compared with the previous two days. Amid the weekend stockpiling cycle, downstream processing enterprises increased their purchases from the previous two days, and trading firms engaging in both spot and futures market showed strong buying interest for hedging, driving premiums upward. However, deep discounts kept suppliers reluctant to sell, and market quotes trended higher. Ultimately, the actual transaction price range in central China centered around a discount of 120-150 yuan/mt against the SHFE aluminum July contract. The central China selling sentiment index was 2.84 today, down 0.02 from the previous trading day; the purchasing sentiment index was 2.18, up 0.02 from the previous trading day.

On the inventory side, aluminum ingot inventory in major consumption regions fell 0.85 WoW today, with destocking mainly in Guangdong and Wuxi.