Restocking Ahead of New Year's Day in East China, Spot Aluminum Discount Continues to Narrow [SMM Spot Aluminum Midday Review]

During the early trading session, SHFE aluminum surged to around 19,800 yuan/mt before slightly dipping to around 19,750 yuan/mt in the second session. It then rebounded above the daily moving average and fluctuated rangebound. Specifically, the east China market was supported by downstream restocking ahead of the New Year holiday, coupled with low inventories held by suppliers, leading to a continued narrowing of the discount, stabilizing at around a discount of 10 yuan/mt. Today, the SMM A00 spot price was at a discount of 10 yuan/mt against the SHFE 2501 contract, up 10 yuan/mt from the previous trading day. SMM A00 aluminum ingot prices stood at 19,770 yuan/mt, up 70 yuan/mt from the previous trading day.

The central China market remained weak as some small and medium-sized enterprises gradually entered the holiday period, leading to continued weakening demand. The Henan-Shanghai price spread widened to a discount of around 110 yuan/mt. SMM central China A00 aluminum prices against the SHFE 2501 contract recorded 19,660 yuan/mt, up 50 yuan/mt from the previous trading day, with actual market transactions at around a discount of 10 yuan/mt against SMM central China prices.

In terms of inventory, SMM mainstream aluminum consumption area inventory recorded 359,200 mt, an increase of 1,900 mt from the previous trading day. After the previous wave of restocking at lower prices, as the off-season deepens, the spot market is expected to weaken, and premiums and discounts across regions are likely to show a weakening trend.

Data Source: SMM

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