Social Inventory Continues to Decline, Spot Aluminum Supported [SMM Spot Aluminum Midday Review]

SMM  January 16 -

In the early trading session today, SHFE aluminum front-month contract fluctuated upward, with its center moving higher. Social inventory of aluminum ingots saw another significant destocking, reaching historically low levels, providing support for the futures market. Coupled with pre-holiday stockpiling demand from downstream sectors, spot discounts were maintained, and transactions were moderate.

Specifically, trading activity in east China improved compared to the previous day, mainly due to downstream optimism about future aluminum prices, improved stockpiling willingness, and low inventory levels. Suppliers primarily traded at SMM average prices. Today, SMM A00 aluminum ingot prices showed a discount of 90 yuan/mt against the SHFE 2502 contract, narrowing by 20 yuan/mt from the previous trading day. SMM A00 aluminum ingot prices stood at 20,200 yuan/mt, up by 180 yuan/mt from the previous trading day.

In the central China market, the operating rate of downstream plate/sheet, strip, and foil sectors was moderate, mainly due to pre-holiday rush orders. However, the desire to bargain down prices persisted, with spot discounts dominating transactions. Today, the Henan-Shanghai price spread showed a discount of around 110 yuan/mt. SMM central China A00 aluminum ingot prices recorded 20,090 yuan/mt against the SHFE 2502 contract, up by 150 yuan/mt from the previous trading day, with actual market transactions mainly at SMM central China -20 to -30 yuan/mt.

Regarding inventory, according to SMM domestic social aluminum ingot daily inventory data, as of January 16, daily destocking reached 15,000 mt, bringing the total to 440,000 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, with regional premiums and discounts expected to weaken.

Source: SMM

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