SHFE Aluminium Moved Down In May Amid Macro Headwinds And Poor Domestic Consumption

The most-traded SHFE aluminium contract experienced volatility in the period of May 12-June 12, with its monthly low and high at 17,455 yuan/mt and 18,535 yuan/mt respectively. The contract closed at 18,190 yuan/mt as of June 12, an increase of 230 yuan/mt or 1.28% on the month. LME aluminium moved between $2,190-2,320/mt during May 12-June 12, and traded at $2,239.5/mt as of CST 15:00 June 12, up 1.15% on the month.

Spot market: East China market maintained small spot premiums after the Labour Day holiday. Supply tightened before delivery of SHFE front-month contract, lifting spot premiums in east and south China. Subsequently, SHFE aluminium prices kept falling due to macro headwinds and spot market was also affected, reversing premiums in east china into discounts. Discounts shrank after delivery of futures contract. Low inventories and purchases by large traders to deliver long-term contracts before the end of May lifted spot premiums in east China to 150 yuan/mt, the highest in almost half a year. However, spot premiums fell back to around zero after delivery of long-term contracts was completed.  Entering June, aluminium ingot inventories continued to decline. Spot premiums are expected to be maintained in east and south China. 

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