SMM March 7 -
SHFE aluminum front-month contract fluctuated at highs during the early trading session today. Market activity showed divergence, with traders being active while downstream buyers remained cautious and purchased sparingly. Specifically, in east China, traders were slightly more active compared to yesterday, while downstream buyers were hesitant due to high prices. Spot discounts remained unchanged from the previous trading day. Today, SMM A00 aluminum was at a discount of 50 yuan/mt against the SHFE 2503 contract, with SMM A00 aluminum ingot priced at 20,840 yuan/mt, up 40 yuan/mt from the previous trading day.
In central China, due to high aluminum prices, downstream buyers mainly relied on long-term contract cargo pick-up and prioritized reducing finished product and raw material inventories. Market activity showed no significant improvement. However, trading at distribution ports was relatively active, with suppliers maintaining high enthusiasm for shipments, mostly transacted at parity to a discount of 10 yuan/mt against central China prices. SMM central China A00 aluminum was recorded at 20,720 yuan/mt, up 40 yuan/mt from the previous trading day, with the Henan-Shanghai price spread at -120 yuan/mt, unchanged. Focus remains on inventory performance by the weekend and hedging positions under high aluminum prices.
Regarding inventory, according to SMM data on aluminum ingot social inventories in three domestic regions, as of March 7, inventories in major domestic consumption areas stood at 725,000 mt, down 4,800 mt WoW. Inventories in major consumption areas continued to decline, but due to high absolute prices, downstream buyers were hesitant and purchased sparingly. Spot premiums and discounts lacked upward momentum and are expected to remain relatively stable with a weak trend next week.
Data source: SMM
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