SMM June 18 News: In early trading, the SHFE aluminum 2606 contract fluctuated, with its trading center lower than the same period yesterday. Affected by lower aluminum prices and pre-holiday stockpiling, buying sentiment remained relatively active today. Good destocking performance pushed sellers' quotes and transaction prices to strengthen continuously. Mainstream spot aluminum transaction prices were at a discount of 50-60 yuan/mt against the SHFE aluminum 07 contract. Mainstream spot aluminum transaction prices were at a discount of 60-80 yuan/mt against the SHFE aluminum 07 contract. In east China today, the shipment sentiment index was 2.91, flat MoM; the buying sentiment index was 3.2, up 0.14 MoM. As today was the last day before the Dragon Boat Festival, downstream processing enterprises in the central China market showed strong buying sentiment, and overall transaction was relatively active, though actual transaction prices were relatively weak. Cargo-holding traders tended to sell large volumes before the holiday to avoid risks from price fluctuations during the holiday. Ultimately, actual transaction prices in the central China market were in the range of a discount of 70-100 yuan/mt against the SHFE aluminum 07 contract. In central China today, the shipment sentiment index was 2.93, up 0.01 MoM; the buying sentiment index was 2.23, up 0.02 MoM. On the inventory front, aluminum ingot inventories in major consuming regions fell 1.75 MoM today, with all three regions showing destocking trends.

[SMM Aluminum Weekly Review: Geopolitical Premium Recedes, Coupled with Hawkish US Fed, Aluminum Prices Fall Under Pressure Both at Home and Abroad]

[Destocking Logic Continues to Materialize, Macro Pressure Caps Aluminum Price Upside] SMM maintains its forecast that inventory will fall to around 1.28 million mt by late June, and is expected to further approach 1.2 million mt by end‑June/early July, providing some support for aluminum prices. However, China’s high inventory pressure remains relatively evident, and with the current bearish macro sentiment dominating the market, domestic aluminum prices will mainly fluctuate in consolidation in the short term.

According to SMM statistics, as of June 12, in-factory inventory days for aluminum rod in China stood at 2.66 days, a sharp decline of 1.25 days WoW from 3.91 days on June 5, with the inventory ratio plunging from 37.45% to 9.28%, a drop of 28.17 percentage points. During the same period, the weekly operating rate of the aluminum wire and cable industry recorded 82.10%, up 1.76 percentage points WoW

SMM June 17: In early trading, the SHFE aluminum 2606 contract fluctuated upward, with its center running higher than that at the same time yesterday. However, as aluminum prices held near recent lows, buyers’ purchasing sentiment remained relatively active, driving sellers’ quotes and transaction prices to strengthen further. Today, influenced by the rise in aluminum prices, some sellers’ shipment sentiment edged up slightly from yesterday. The mainstream spot transaction price was at a discount of 60-80 yuan/mt against the SHFE aluminum 2407 contract. Today, the east China selling sentiment index was 2.91, up 0.08 from yesterday; the purchasing sentiment index was 3.06, unchanged from yesterday. Futures prices held at monthly lows. Today, in the central China market, inventory-holding traders showed strong sentiment to hold prices firm and hold back from selling, tending to quickly narrow premiums to capture price spreads. However, downstream processing enterprises had low willingness to purchase at high prices. The market saw a tug-of-war between holding prices firm and pushing for lower prices, with premiums showing a downward trend. Ultimately, the actual transaction price range in central China centered around a discount of 100-130 yuan/mt against the SHFE aluminum 2407 contract. Today, the central China selling sentiment index was 2.92, up 0.01 from yesterday; the purchasing sentiment index was 2.21, down 0.01 from yesterday. On the inventory front, the aluminum ingot inventory in mainstream consumption regions fell by 1.65 from yesterday, with all three regions showing destocking.

[Geopolitical Risk Premium Exits Market, Aluminum Prices Under Short-Term Pressure and Volatility] On the macro front, the US and Iran have completed signing an electronic MOU. Expectations of geopolitical easing continue to materialize, market panic over the Middle East conflict continues to fade, and the geopolitical risk premium for commodities has weakened significantly. US May CPI rose 4.2% YoY, hitting a three-year high, while core CPI also strengthened. The market continues to bet on the Fed restarting rate hikes within the year, and expectations of tightening liquidity continue to suppress metal valuations. On the fundamentals side, the Middle East conflict caused involuntary production cuts in overseas aluminum capacity. Expectations of a global supply deficit continue to widen, and coupled with expectations of rising energy costs, this provides strong bottom support for LME aluminum. China’s inventory destocking trend has been established, and the destocking logic continues to be realized. The rebound in the proportion of liquid aluminum, support from export demand, and supply normalization compressing aluminum ingot formation—these three fundamental factors jointly drive the continuation of destocking. SMM maintains its forecast that inventory will fall to around 1.28 million mt by late June, and may further approach 1.2 million mt by end-June/early July, bringing some support to aluminum prices. However, the pressure from high domestic inventory remains relatively pronounced. Coupled with the currently bearish macro sentiment dominating the market, short-term domestic aluminum prices are mainly in the doldrums, with volatile adjustments.

[SMM Aluminum Alloy Daily Review] The SMM ADC12 average price was reported at 24,100 yuan/mt today, down 100 yuan/mt from the previous trading day. During the day, both aluminum futures and aluminum prices weakened, dragging on the ADC12 price to some extent. However, structural issues such as tight tax invoices and difficulties in purchasing compliant aluminum scrap have not eased, keeping enterprises' production costs under continuous pressure and providing some support to spot ADC12 prices. Overall, the current ADC12 market presents a pattern of "strong cost support, weak demand follow-up". In the short term, the downside room for prices is limited, but there is also a lack of sufficient driving force for an upward breakout. Prices are expected to move sideways.

SMM, June 16: The SHFE aluminum price center in the morning session was far below the same period yesterday. However, affected by the sharp decline in aluminum prices, buyer purchasing sentiment surged, driving seller quotes and transaction prices to strengthen continuously. Some sellers, influenced by the aluminum prices, held back from selling and raised their quotes. The mainstream spot transaction prices were at a discount of 80 to a discount of 90 yuan/mt against the SHFE aluminum July contract. Today, the shipment sentiment index in East China was 2.83, down 0.13 MoM; the purchasing sentiment index was 3.06, up 0.30 MoM. SHFE aluminum futures prices plunged in the night session of the previous day and the morning session today. In the central China market, the buying sentiment of downstream processing enterprises recovered, and their willingness to stockpile increased. Trading firms engaging in both spot and futures markets tended to quickly earn price spreads, and the sentiment of holding prices firm and holding back from selling was strong, keeping market quotes high. Ultimately, the actual transaction price range in the central China market was at a discount of 120-140 yuan/mt against the SHFE aluminum July contract. Today, the shipment sentiment index in the central China market was 2.91, down 0.01 MoM; the purchasing sentiment index was 2.22, up 0.02 MoM. On the inventory front, the aluminum ingot inventory in major consumption areas fell 0.25 MoM today, with destocking mainly driven by Guangdong and Wuxi.

During yesterday's night session and today's morning session, SHFE aluminum futures prices plunged. In the Central China market, downstream processing enterprises' buying sentiment recovered somewhat, and their stockpiling willingness increased. Trading firms engaging in both spot and futures markets were inclined to quickly capture price spreads, with significant sentiment of holding prices firm and holding back from selling, driving market quotations to stay high. Ultimately, the actual transaction price range in the Central China market was around a discount of 120-140 yuan/mt against the SHFE aluminum July contract.

[Geopolitical easing combined with manufacturing slowdown exert dual suppression, SHFE and LME aluminum prices plunge significantly] SMM maintains its forecast that inventory will drop to around 1.28 million mt by late June, and may further approach 1.2 million mt by the end of June or early July, providing some support for aluminum prices. However, the pressure from high domestic inventory remains relatively evident, and coupled with the currently dominant bearish macro sentiment in the market, domestic aluminum prices are expected to mainly be in the doldrums with adjustments in the short term.