Downstream Purchase Willingness Declines, Spot Aluminum Discounts Widen [SMM Spot Aluminum Midday Review]

SMM, January 15

— In the early trading session today, SHFE aluminum front-month contract fluctuated downward due to the weakening cost support from alumina and the bearish impact of downstream entering the holiday period. Market transactions weakened, and spot discounts widened.

Specifically, trading activity in east China declined, mainly because downstream sectors gradually entered the holiday period. Coupled with earlier restocking at low aluminum prices, purchasing willingness decreased after aluminum prices broke above 20,000 yuan/mt. Suppliers mainly sold against SMM-10. Today, SMM A00 aluminum ingot prices showed a discount of 90 yuan/mt against the SHFE 2501 contract, down 20 yuan/mt from the previous trading day. SMM A00 aluminum ingot prices stood at 20,020 yuan/mt, down 140 yuan/mt from the previous trading day.

In the central China market, downstream demand continued to weaken. After aluminum prices declined, suppliers' willingness to sell decreased, and the narrowing of spot discounts was limited. Today, the Henan-Shanghai price spread showed a discount of around 80 yuan/mt. SMM central China A00 aluminum ingot prices recorded 19,940 yuan/mt against the SHFE 2501 contract, down 150 yuan/mt from the previous trading day. Actual market transactions were mainly against SMM central China -10.

Regarding inventory, according to SMM's domestic daily social inventory data for aluminum ingots, as of January 15, daily destocking reached 4,400 mt, bringing the total to 315,600 mt. In the short term, aluminum ingot arrivals remain a disruptive factor. However, as downstream sectors enter the Chinese New Year break and subsequent arrivals increase, social inventory may shift to an inventory buildup. Regional premiums and discounts are expected to weaken.

Source: SMM

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