High Aluminum Prices Suppressed Downstream Demand, and Market Premiums Continued to Widen [SMM Spot Aluminum Midday Review]

SMM, March 12:

The SHFE aluminum 03 contract opened today and fluctuated upward. High aluminum prices suppressed downstream demand, overall procurement demand remained weak, and market premiums continued to soften. Market premiums kept declining from the opening. Today’s mainstream transaction prices were concentrated at discounts of 20 yuan/mt to the average price. Today, the east China market’s shipments sentiment index was 3.32, up 0.05 MoM; the purchasing sentiment index was 2.57, down 0.09 MoM.

With aluminum prices rising for consecutive days, traders and downstream processing enterprises in the central China market showed weak buying sentiment, while end-user clients were also less willing to pick up goods. Downstream plants faced inventory overhang, with costs and operating rates constrained, maintaining only limited restocking for rigid demand or suspending restocking altogether. Meanwhile, suppliers showed a strong willingness to sell but weak willingness to hold prices firm. Ultimately, actual mainstream transaction prices in the central China market were mostly around discounts of 10-20 yuan to the central China price. Today, the central China market’s shipments sentiment index was 2.67, up 0.02 MoM; the purchasing sentiment index was 2.32, down 0.02 MoM.

Inventory side, aluminum ingot inventory in major consumption regions increased by 7,500 mt MoM today, with the inventory buildup mainly coming from Guangdong and Gongyi. In the short term, aluminum ingot continued its post-Chinese New Year seasonal inventory buildup, and affected by bullish sentiment, premiums are expected to remain on a narrowing trend.