Downstream Bearish Sentiment Intensifies, Spot Market Falls into Wait-and-See Mode [SMM Spot Aluminum Midday Review]

During this morning's session, the most-traded SHFE aluminum contract fluctuated around 19,650 yuan/mt, with the center of the futures market shifting to around 19,620 yuan/mt in the second trading period. In the spot market, alumina prices have seen a significant correction, and downstream aluminum semis producers have become more bearish on aluminum prices. Coupled with some enterprises in east China gradually entering the Chinese New Year holiday, demand weakened, and market premiums declined. SMM A00 aluminum was quoted at a discount of 20 yuan/mt to the SHFE aluminum 2501 contract, down 20 yuan/mt from the previous trading day. SMM A00 aluminum ingot was recorded at 19,640 yuan/mt, up 10 yuan/mt from the previous trading day.

In the central China market, daily inventory at major warehouses decreased by 5,400 mt to 68,800 mt, boosting traders' confidence to stand firm on quotes. However, under the off-season sentiment, actual trading volume showed little change from the previous day, while expectations of further weakening intensified. Today, the Henan-Shanghai price spread remained at a discount of around 80 yuan/mt. SMM Central China A00 aluminum was quoted at 19,560 yuan/mt against the SHFE aluminum 2501 contract, up 10 yuan/mt from the previous trading day. Actual transactions in the market were about 10 yuan/mt higher than SMM Central China prices, unchanged from the previous trading day.

Regarding inventory, daily inventory in major aluminum consumption regions tracked by SMM was recorded at 34.95 mt, down 10,700 mt WoW. The short-term inventory decline has bolstered traders' confidence to stand firm on quotes. However, as the off-season deepens, market consumption is gradually weakening, outflows from warehouses are declining, and regional premiums and discounts are expected to continue softening.

Data Source: SMM

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