Aluminum Prices Rebounded to High Levels, but Destocking Still Boosted Spot Market Confidence [SMM Spot Aluminum Midday Review]

In the early trading session today, the center of SHFE front-month aluminum contract prices almost continuously moved upward, rebounding above 20,800 yuan/mt. In terms of spot market performance, the absolute price center in east China declined yesterday, with downstream transactions improving and outflows from warehouses increasing. Although aluminum prices rebounded to a high level during the day, destocking still boosted market confidence, and spot premiums remained firm. The market traded SMM A00 aluminum ingot at parity to around 10 yuan/mt. SMM A00 aluminum ingot was at a discount of 40 yuan/mt against SHFE 2504 contract, up 10 yuan/mt from the previous trading day, with SMM A00 aluminum ingot prices recorded at 20,810 yuan/mt, an increase of 220 yuan/mt from the previous trading day.

In the central China market, due to the previous decline in aluminum prices, downstream restocking increased, and destocking in the central China market grew, boosting supplier confidence. Most suppliers were bullish and reluctant to sell, leading to firm premiums during the day. However, as prices rebounded to a high level, downstream willingness to trade decreased, and trading activity significantly declined. SMM central China A00 aluminum ingot was recorded at 20,700 yuan/mt against SHFE 2504 contract, up 220 yuan/mt from the previous trading day, with the price spread between central China and SHFE at -110 yuan/mt. The actual market transactions were at parity to a premium of around 10 yuan/mt against SMM central China prices.

Regarding inventory, SMM's daily aluminum social inventory was recorded at 834,000 mt, a decrease of 28,000 mt. After the previous decline in aluminum prices, downstream restocking increased, accelerating destocking across the country, and market premiums became firmer. Under the peak season expectations of March and April, high aluminum prices will gradually be absorbed by the downstream, but in the short term, as aluminum prices rebound to a high level again, spot market premiums face some resistance.

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