As aluminum prices experienced a correction, spot discounts remained under pressure [SMM Spot Aluminum Midday Review]

SMM January 30:

SHFE aluminum 2602 fluctuated downward in the morning session, with the price center lower than the previous trading day. Due to high aluminum prices and the Chinese New Year break at downstream processing enterprises, overall market buying sentiment remained weak. The mainstream transaction prices were concentrated at discounts of 10 yuan/mt to 30 yuan/mt. Today, the east China market selling sentiment index was 2.53, down 0.22 WoW; the buying sentiment index was 2.13, down 0.1 WoW. SMM A00 aluminum closed at 24,660 yuan/mt, down 200 yuan/mt from the previous trading day, at a discount of 210 yuan/mt against the 2602 contract, down 10 yuan/mt from the previous trading day.

Aluminum prices pulled back after the rally, and as the latest round of environmental protection-related controls in Henan entered its final stage, downstream processing enterprises took the opportunity to restock slightly, while traders continued to actively purchase for hedging purposes, leading to a slight improvement in market buying sentiment. The actual transaction prices in the central China market eventually stabilized within the range of a 20 yuan/mt to 40 yuan/mt discount to the central China price. Today, the central China market selling sentiment index was 2.91, up 0.02 WoW; the buying sentiment index was 2.46, up 0.01 WoW. SMM central China closed at 24,480 yuan/mt, down 210 yuan/mt from the previous trading day, at a discount of 390 yuan/mt against the 2602 contract, down 20 yuan/mt from the previous trading day. The Henan-Shanghai price spread was -180 yuan/mt, widening by 10 yuan/mt from the previous trading day.

Inventory side, aluminum ingot inventory in major consumption areas increased by 6,500 mt WoW, with all three regions experiencing inventory buildup. In the short term, high aluminum prices may continue to suppress end-use demand, coupled with the impact of the downstream Chinese New Year break, aluminum ingots still face inventory buildup risks, and spot premiums/discounts are expected to remain under pressure.