Traders Were Active in Purchasing for Hedging, While End-User Buying Sentiment Weakened [SMM Midday Review of Spot Aluminum]

SMM News, Apr 2:

In early trading, SHFE aluminum 2604 fluctuated upward, with its center moving higher than the previous day. Affected by elevated aluminum prices, shipping sentiment was stronger than buying sentiment, while end-user downstream purchase sentiment was weak and spot cargo circulation was relatively ample. Market transactions were mainly concentrated at discounts of 10 yuan/mt to the SMM A00 aluminum average price. Today, the east China market shipping sentiment index was 3.43, up 0.02 MoM; the purchasing sentiment index was 3.01, up 0.01 MoM.

Aluminum futures prices remained elevated, but in the central China market, traders were overall more bullish than bearish. Although downstream orders were not enough to support excessive stockpiling, traders were relatively active in purchasing for hedging purposes. After the initial stage, shipments from sellers declined, while higher-bid purchasing increased, driving market quotes and transaction prices all the way up. Ultimately, actual transaction prices in the central China market ranged from a discount of 40 yuan/mt to the central China price to a premium of 10 yuan/mt over the central China price. Today, the central China market shipping sentiment index was 2.79, up 0.03 MoM; the purchasing sentiment index was 2.44, up 0.02 MoM.

Inventory side, aluminum ingot inventory in major consumption regions increased by 2,000 mt from the previous period today, with Guangdong as the main source of the inventory buildup. In the short term, aluminum ingot inventory continued its seasonal buildup after the Chinese New Year. Affected by bullish market sentiment, premiums are expected to maintain a narrowing trend.