As the Chinese New Year holiday approaches, market trading sentiment declines [SMM Spot Aluminum Midday Review]

SMM February 9:

SHFE aluminum 2602 fluctuated upward in the morning session, with the price center rising from the previous trading day. Due to higher aluminum prices and the approaching Chinese New Year, overall market procurement sentiment was weak, prompting sellers to lower prices. Mainstream transaction prices were concentrated at discounts of 10 yuan/mt to 30 yuan/mt. Today, the east China market shipment sentiment index was 2.78, down 0.06 MoM; the purchase sentiment index was 2.68, down 0.18 MoM. SMM A00 aluminum closed at 23,400 yuan/mt, up 260 yuan/mt from the previous trading day, at a discount of 170 yuan/mt against the 2602 contract, down 20 yuan/mt from the previous trading day.

Transactions in the central China market were mainly sluggish today. As the Chinese New Year holiday approaches, pre-holiday stockpiling by downstream processing enterprises has largely ended, with only minimal just-in-time procurement and some traders buying the dip for stockpiling. Suppliers initially showed strong willingness to hold prices firm, but as transactions remained weak, prices continued to decline. Ultimately, actual transaction prices in the central China market ranged from a premium of 10 yuan/mt to a discount of 30 yuan/mt against the central China price. Today, the central China market shipment sentiment index was 2.73, up 0.04 MoM; the purchase sentiment index was 2.17, flat MoM. SMM central China closed at 23,280 yuan/mt, up 250 yuan/mt from the previous trading day, at a discount of 290 yuan/mt against the 2602 contract, down 30 yuan/mt from the previous trading day. The Henan-Shanghai price spread was -120 yuan/mt, widening by 10 yuan/mt from the previous trading day.

Inventory side, aluminum ingot inventory in major consumption areas increased by 28,000 mt MoM, with all three regions showing 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.