The most-traded SHFE aluminum contract fluctuated downward during the morning session today, plunging to around 19,780 yuan/mt before rebounding to fluctuate near 19,880 yuan/mt. In the spot market, stockpiling during the New Year holiday led to increased outflows from warehouses in east China, slightly tightening market supply and boosting traders' sentiment to stand firm on quotes. However, after the holiday, differences between buyers and sellers became more apparent, and premiums and discounts were more likely to fall than rise. Today, SMM A00 aluminum was on par with the SHFE aluminum 2501 contract, unchanged from the previous trading day, while SMM A00 aluminum ingot was recorded at 19,850 yuan/mt, down 20 yuan/mt from the previous trading day.
In the central China market, inventory declines also provided support, with stable picking up of goods by long-term contract customers during the day. Coupled with the Friday weekend effect, spot order trading was relatively active, narrowing the Henan-Shanghai price spread to a discount of around 90 yuan/mt. SMM Central China A00 aluminum was recorded at 19,760 yuan/mt against the SHFE aluminum 2501 contract, down 10 yuan/mt from the previous trading day, while actual market transactions were about 10 yuan/mt higher than SMM Central China prices.
In terms of inventory, daily inventory in major aluminum consumption regions tracked by SMM was recorded at 35.62 mt, down 400 mt from the previous trading day. Stockpiling during the New Year holiday slightly reduced inventory, leading to a modest recovery in premiums and discounts in multiple regions. However, with aluminum prices still at a relatively high level and more processing plants gradually shutting down for the holiday, demand support weakened, and premiums and discounts may decline again. Next week, attention should focus on pre-holiday stockpiling by downstream sectors.
Data Source: SMM
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