SMM February 24:
SHFE aluminum 2602 fluctuated upward in the morning session, with the price center rising from the previous trading day. Influenced by the higher SHFE aluminum prices, overall purchase sentiment still lagged behind shipment sentiment, but due to the end of the Chinese New Year break, transaction sentiment rose compared to the pre-holiday trading day. Mainstream quotations concentrated at a discount of 20 yuan/mt to the average price. Today, the shipment sentiment index in the east China market was 2.34, up 0.34 WoW; the purchase sentiment index was 2.31, up 0.25 WoW. SMM A00 aluminum closed at 23,390 yuan/mt, up 230 yuan/mt from the previous trading day, at a discount of 160 yuan/mt against the 2602 contract, down 40 yuan/mt from the previous trading day; at a discount of 210 yuan/mt against the 2603 contract.
After the Chinese New Year break, traders and downstream enterprises in central China gradually resumed work. Aluminum ingot inventory saw a significant buildup, and post-holiday recovery boosted shipment and purchase willingness among traders and processing enterprises. However, as the holiday was not completely over, some traders adopted a wait-and-see approach, and market transactions remained sluggish. Actual transaction prices in the central China market finally ranged from a discount of 20 yuan to a premium of 20 yuan against the central China price, with premiums and discounts narrowing as aluminum prices rose. Today, the shipment sentiment index in the central China market was 2.52, up 0.27 WoW; the purchase sentiment index was 2.14, up 0.24 WoW. SMM central China closed at 23,310 yuan/mt, up 230 yuan/mt from the previous trading day, at a discount of 240 yuan/mt against the 2602 contract, down 40 yuan/mt from the previous trading day; at a discount of 290 yuan/mt against the 2603 contract. The price spread between Henan and Shanghai was -80 yuan/mt, flat from the previous trading day.
Inventory side, aluminum ingot inventory in major consumption areas increased by 196,000 mt WoW, with all three regions showing inventory buildup due to downstream Chinese New Year breaks. In the short term, high aluminum prices may continue to suppress end-use demand, and combined with the impact of downstream holiday breaks, aluminum ingots still face inventory buildup risks, and spot premiums/discounts are expected to remain under pressure.
