Aluminum Prices Rose Sharply, Boosting Shipment Sentiment [SMM Midday Spot Aluminum Commentary]

SMM News, March 30:

SHFE aluminum 2604 rose in early trading, with its center moving up sharply from the previous day. Affected by the rise in aluminum prices, shipment sentiment increased significantly today. Bullish sentiment was strong, while market premiums did not widen notably. Today, mainstream transaction prices in the market were concentrated at a discount of 10 yuan/mt to parity against the SHFE aluminum 04 contract average price. Today, the shipment sentiment index in the east China market was 3.18, up 0.26 MoM; the purchasing sentiment index was 3.11, down 0.11 MoM.

The war caused wild swings in aluminum fundamentals, driving futures aluminum prices sharply higher, while traders in central China remained bullish. However, on the first day of the price increase, downstream processing enterprises showed strong wait-and-see sentiment, and market trading had not yet fully turned active. Only traders purchased at deep discounts, transaction prices remained at low levels throughout and showed a continued downward trend, and the price spread between large and small traders was significant. Market quotations ultimately hovered from parity with the central China price to a discount of 40 yuan against the central China price, with the main transaction range concentrated at discounts of 10-30 yuan against the central China price. Today, the shipment sentiment index in the central China market was 2.72, up 0.07 MoM; the purchasing sentiment index was 2.39, down 0.01 MoM.

Inventory side, aluminum ingot inventory in major consumption regions increased by 17,500 mt MoM today, with the inventory buildup mainly coming from Wuxi and Guangdong. In the short term, aluminum ingot continued its post-Chinese New Year seasonal inventory buildup, and supported by bullish market sentiment, premiums were expected to remain on a narrowing trend.