[SMM Central China Spot Aluminum Midday Review] SHFE aluminum futures prices continued to decline compared to yesterday's early session, with a relatively narrow spot-futures spread. Traders in the central China market took the opportunity to hold prices firm, maintaining high discounts and shipping large volumes, while market trading sentiment edged up from yesterday. The actual transaction price range in the central China market was around a discount of 100-130 yuan/mt against the SHFE aluminum June contract.

[Hawkish US Fed Expectations Heat Up, Aluminum Prices Under Pressure and in the Doldrums] On the fundamentals, the tight spot cargo situation in the ex-China aluminum market continued. LME aluminum inventory remained at low levels, cancelled warrants continued to grow, reflecting tight available supplies. Meanwhile, Japan's Q3 spot aluminum premiums were further raised, also indicating resilient Asian spot demand. Multiple factors jointly supported LME aluminum's performance. On the China side, driven by improved export margins, aluminum semis exports recovered and are expected to remain at a relatively high level in the near term. However, the pace of China's inventory drawdown was slow, spot transactions were lackluster, and downstream purchasing remained cautious, limiting SHFE aluminum's upside room. Overall, aluminum prices are expected to continue moving sideways with LME outperforming SHFE in the near term.

SMM May 22: According to data from the General Administration of Customs, China's primary aluminum imports in April 2026 were approximately 265,000 mt, up 4.1% MoM and up 5.9% YoY. From January to April 2026, China's cumulative primary aluminum imports totaled approximately 911,000 mt, up 9.2% YoY. In April, China's primary aluminum exports were approximately 16,000 mt, up 6.3% MoM and up 13.7% YoY. From January to April, cumulative primary aluminum exports totaled approximately 54,000 mt, up around 55.1% YoY. In April, China's net primary aluminum imports were 250,000 mt, up 4.0% MoM and up 5.5% YoY. From January to April, China's cumulative net primary aluminum imports were approximately 858,000 mt, up 7.2% YoY. (The above import and export data are based on HS codes 76011090 and 76011010.) By country of origin, 83.6% of China's total primary aluminum imports in April came from the Russian Federation, 7.9% from Indonesia, 3.5% from Australia, and 2.7% from India. By trade mode, from January to April, the share of primary aluminum imports under Ordinary Trade was 4.0%, 1.3%, 1.7%, and 0.2% respectively, down 23.6, 27.2, 21.3, and 23.7 percentage points YoY respectively. LME aluminum outperformed SHFE aluminum in price trends, the SHFE/LME price ratio declined, and imports under Ordinary Trade decreased. It is possible that large volumes of bonded warehouse cargo may be re-exported to other countries outside China going forward. According to SMM surveys, long-term contracts and previously signed orders in April were fulfilled normally. Combined with in-transit cargo arriving at ports successively, China's primary aluminum imports remained at elevated levels. Currently, the supply-demand gap in the ex-China aluminum market is significant, with high spot aluminum ingot premiums outside China. Going forward, some imported cargo may be diverted for re-export to high-premium regions such as Japan and South Korea, Thailand, India, and Europe and the US. Overall, China's net primary aluminum imports in 2026 are expected to decline YoY.

[Geopolitical Tensions Boost LME, China Inventory Buildup and Weakening Demand Under Pressure] In the short term, the core pattern of LME outperforming SHFE in the aluminum market is difficult to reverse. The strength in LME will support room for SHFE aluminum to catch up after the holiday, but high inventory and weak demand in China will suppress overall gains. Going forward, the focus should be on the pace of aluminum ingot destocking in China and the strength of rigid demand release from downstream resumption of work and production resumptions.

In the short term, the core pattern of LME outperforms SHFE is unlikely to reverse. Strength in the overseas market will support SHFE aluminum's post-holiday catch-up potential, but high domestic inventory and weak demand will cap overall gains. Going forward, key focus will be on the pace of China aluminum ingot destocking and the strength of rigid demand release from downstream production resumptions.

As of April 24, the mainstream price in the south China market — SMM A00 aluminum (Foshan) was at a discount of 345 yuan/mt against the 2605 contract, while the mainstream price in the east China market — SMM A00 aluminum was at a discount of 130 yuan/mt against the 2605 contract. The price spread between the two regions had exceeded 200 yuan/mt, covering sea freight, short-haul transfer, and logistics costs, officially opening up the transshipment window between Guangdong and Shanghai...