SHFE Aluminum Fluctuated Downward, Trading Sentiment Diverged in East and Central China [SMM Spot Aluminum Midday Review]

SMM February 5:

SHFE aluminum 2602 fluctuated downward in the morning session, with the price center lower than the previous trading day. Affected by the decline in aluminum prices, overall market procurement sentiment rose, narrowing the overall market spot premiums/discounts. Mainstream transaction prices were concentrated at a premium of 20 yuan/mt to 30 yuan/mt. Today, the east China market selling sentiment index was 2.84, down 0.02 MoM; the purchasing sentiment index was 2.69, up 0.15 MoM. SMM A00 aluminum closed at 23,340 yuan/mt, down 420 yuan/mt from the previous trading day, at a discount of 180 yuan/mt against the 2602 contract, up 30 yuan/mt from the previous trading day.

Trading sentiment in the central China market weakened today. End-use consumption softened and the Chinese New Year break is expected to start, leading to a decrease in raw material stockpiling demand from downstream processing enterprises. On the selling side, suppliers showed a strong willingness to hold prices firm and were reluctant to sell. Although the market dipped slightly, premium/discount prices remained high. Ultimately, actual transaction prices in the central China market hovered between a premium of 10 yuan/mt to 40 yuan/mt against the central China price. Today, the central China market selling sentiment index was 2.74, down 0.04 MoM; the purchasing sentiment index was 2.24, down 0.06 MoM. SMM central China price closed at 23,240 yuan/mt, down 400 yuan/mt from the previous trading day, at a discount of 280 yuan/mt against the 2602 contract, up 50 yuan/mt from the previous trading day. The Henan-Shanghai price spread was -100 yuan/mt, narrowing by 20 yuan/mt from the previous trading day.

Inventory side, aluminum ingot inventory in major consumption areas increased by 1,500 mt MoM today, with the main sources of inventory buildup being Guangdong and Gongyi. 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.