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

SMM February 11:

SHFE aluminum 2602 contract fluctuated with small gains in the morning session, but the price center edged down slightly compared with the previous trading day. Affected by the approaching Chinese New Year, overall market trading sentiment was weak, with mainstream transaction prices concentrated at the average price to a premium of 10 yuan/mt. Today, the east China market shipment sentiment index was 2.3, down 0.4 WoW; the purchasing sentiment index was 2.29, down 0.21 WoW. SMM A00 aluminum closed at 23,260 yuan/mt, down 30 yuan/mt from the previous trading day, at a discount of 190 yuan/mt against the 2602 contract, flat from the previous trading day.

Transactions in the central China market remained sluggish today. As the Chinese New Year approaches, pre-holiday stockpiling by downstream processing enterprises has basically ended, with only a small amount of just-in-time procurement. Major suppliers also gradually entered the Chinese New Year break, resulting in limited spot aluminum supply in the market. However, some traders bought the dip and stockpiled, driving transaction prices higher throughout the session, from a premium of 10 yuan/mt against the central China price before the opening to a premium of 50 yuan/mt. The main transaction range was concentrated between a premium of 10 yuan/mt and 30 yuan/mt against the central China price. Today, the central China market shipment sentiment index was 2.56, down 0.16 WoW; the purchasing sentiment index was 2.14, down 0.02 WoW. SMM central China aluminum closed at 23,160 yuan/mt, down 10 yuan/mt from the previous trading day, at a discount of 290 yuan/mt against the 2602 contract, up 20 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was -100 yuan/mt, narrowing 20 yuan/mt from the previous trading day.

Inventory side, aluminum ingot inventories in major consumption areas increased by 4,000 mt WoW today, with the main sources of inventory buildup being Guangdong and Wuxi. In the short term, high aluminum prices may continue to suppress end-use demand, and coupled with the impact of the Chinese New Year break on downstream sectors, aluminum ingots still face inventory buildup risks. Spot premiums/discounts are expected to remain under pressure.