Spot Aluminum Fluctuates at Highs, Downstream Gradually Takes Holidays, Trading Weakens [SMM Spot Aluminum Midday Review]

SMM  January 14 -

In the early trading session, the SHFE aluminum front-month contract fluctuated upward. Domestic aluminum ingot daily inventory in three major regions showed a slight destocking trend, but the extent was limited compared to the significant destocking last week. This was mainly due to downstream processing plants gradually starting their Chinese New Year break this week and the railway transportation costs in Qinghai not yet being confirmed, leading to slight stockpiling of local supplies.

Specifically, trading activity weakened in east China as downstream operations gradually halted for the holiday. Additionally, earlier low aluminum prices prompted downstream restocking, and purchasing sentiment declined after aluminum prices broke above 20,000 yuan/mt. Today, the SMM A00 aluminum spot cargo was at a discount of 70 yuan/mt against the SHFE 2501 contract, down 20 yuan/mt from the previous trading day. The SMM A00 aluminum ingot price stood at 20,160 yuan/mt, up 10 yuan/mt from the previous trading day.

In the central China market, downstream demand weakened, but with inventory remaining low, suppliers showed a sentiment to stand firm on quotes. Today, the discount widened slightly, with the Henan-Shanghai price spread at around a 70 yuan/mt discount. The SMM central China A00 aluminum price was recorded at 20,090 yuan/mt against the SHFE 2501 contract, down 10 yuan/mt from the previous trading day. Actual market transactions were mainly at SMM central China prices minus 20 to minus 10 yuan/mt.

Regarding inventory, according to SMM's domestic daily social inventory data for aluminum ingots, as of January 14, daily destocking was 1,600 mt, bringing the total inventory to 320,000 mt. Short-term continuous destocking supports the market's sentiment to stand firm on quotes. However, as downstream operations enter the Chinese New Year break and new supplies arrive, social inventory may shift to an inventory buildup, and premiums and discounts in various regions are expected to weaken.

Source: SMM

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