Aluminium inventory surges by 55,000 tonnes, spot discounts pattern remains unchanged

This morning, the centre of the most-traded SHFE aluminium contract gradually shifted slightly downward, fluctuating near RMB 20,550 per tonne. In the East China market, aluminium prices rose to high levels, leading to weaker restocking sentiment among downstream buyers, with most transactions driven by rigid demand.

However, the price spread between the current-month and next-month SHFE aluminium contracts fluctuated between C10 and B10 during the morning session. Traders mainly stood firm on quotes, leaving limited room for spot premiums to decline. The SMM A00 spot price was at a discount of RMB 50 per tonne to the SHFE aluminium 2502 contract, down RMB 10 per tonne from the previous trading day. SMM A00 aluminium ingot prices were recorded at RMB 20,540 per tonne, down RMB 60 per tonne from the previous trading day.

In the central China market, absolute price levels similarly impacted transactions, with downstream buyers mostly engaging in rigid demand-driven purchases. Recently, as aluminium prices reached high levels, end-user enterprises showed reduced consumption capacity, and shipments from downstream aluminium processing enterprises declined significantly.

Consequently, under the pace of resumption of work and production, the turnover days of raw material inventories at aluminium processing enterprises showed no growth. The SMM central China A00 price was recorded at RMB 20,410 per tonne, a decrease of RMB 70 per tonne from the previous trading day, with actual market transactions at SMM central China minus RMB 10 per tonne.

Regarding inventory, the weekly inventory in major aluminium consumption regions tracked by SMM was recorded at 818,000 tonnes, with an inventory buildup of 55,000 tonnes, marking an expanded increase. Spot premiums faced resistance as inventory levels rose. Downstream consumption in aluminium processing has not yet recovered, and combined with high aluminium prices, the spot market remained in a continuous inventory buildup phase. After the contract rollover, close attention should be paid to changes in the price spread. Under the oversupply situation, the spot market is expected to remain in a discount state in the short term.

Source: SMM