Premiums in south China remains weak, waiting for demand in peak season

SHFE aluminum opened slightly higher overnight. In early trading, it was driven by news of an accident at an aluminum smelter in the north. Although it fell back later, aluminum prices still rose to a certain extent today. Under the constraints of inventory pressure, spot premiums in south China continued to narrow. Some stockholders raised prices to between the average price to -10. With the sharp fluctuations in SHFE Aluminum, the center of premiums and discounts dropped during the day, with quotations ranging from -10 to -30. After the downstream generally resumed work, they occasionally purchased at low prices, and large buyers also purchased goods at discounts, the transaction volume turned from weak to strong. Today, the SMM Foshan aluminum price quoted a premium of 30 yuan/ton over the 2403 contract, down 30 yuan/ton. The average spot price recorded 18,870 yuan/ton, up 80 yuan/ton. During the second trading session, SHFE aluminum fluctuated slightly at high levels, and holders adjusted accordingly. The buyers replenished the goods in an appropriate amount, and some transactions were completed. The overall transaction price has a discount of 30 yuan/ton to a premium of 20 yuan/ton over the price of SMM south China aluminum, and the transaction price is concentrated at 18,840-18,890 yuan/ton. The Spring Festival holiday is over and it has entered mid-to-late February. Domestic inventory continuously grow. South China aluminum prices repeatedly hit the 19,000 yuan mark but failed. The supply of goods circulating in the domestic market is slightly loose. Inventory pressure restricts spot performance. South China spot premiums have narrowed for four consecutive days. After Feb 24, as downstream industries such as the south China extruders completely resume work, it is expected that outflows from warehouses will return to normal levels in the short term, and market trading volume will rebound to a certain extent from last week. However, due to the recent opening of the import window, spot prices are facing heavy pressure. SMM predicts that the premiums and discounts in south China may remain weak at the end of February, and is cautiously optimistic about the upcoming peak seasons. In March, premiums in south China will have a certain amount of upward space, and we need to continue to pay attention to the post-holiday consumption recovery and market transaction.