First Trading Day of the New Year Encounters Destocking, Discount Continues to Narrow Slightly [SMM Spot Aluminum Midday Review]

In the early trading session today, SHFE aluminum surged above the daily moving average to around 19,890 yuan/mt, fluctuating at highs. In the spot market, east China saw slight destocking, with stockpiling during the New Year holiday driving an increase in outflows from warehouses. Market supply was slightly tight, and traders stood firm on quotes, narrowing the discount to parity. Today, SMM A00 aluminum ingot prices were on par with SHFE aluminum 2501 contract, up 10 yuan/mt from the previous trading day, recording 19,870 yuan/mt, an increase of 100 yuan/mt from the previous trading day.

In central China, the market also benefited from declining inventory, with stable picking up of goods by long-term contract customers during the day. The Henan-Shanghai price spread narrowed to a discount of around 100 yuan/mt. SMM central China A00 aluminum ingot prices were recorded at 19,770 yuan/mt against the SHFE aluminum 2501 contract, up 100 yuan/mt from the previous trading day, with actual market transactions at a premium of around 10 yuan/mt to SMM central China prices.

In terms of inventory, weekly inventory in major aluminum consumption regions monitored by SMM stood at 487,000 mt, down 3,000 mt WoW. Stockpiling by downstream sectors during the New Year holiday led to a slight decline in inventory, with minor recovery in premiums and discounts across multiple regions. However, as aluminum prices remain at highs, more processing plants are expected to shut down for holidays, weakening demand support. Premiums and discounts may weaken again, and attention should be paid to downstream pre-holiday stockpiling next week.

Data Source: SMM

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