Downstream Restocking Slows, Premiums in East China Gradually Weaken [SMM Spot Aluminum Midday Review]

This morning, the SHFE aluminum front-month contract center fluctuated downward, trading below the daily moving average at around 19,680 yuan/mt. In the spot market, some enterprises in east China have gradually entered the Chinese New Year holiday mode, leading to weakening demand and a continued decline in market premiums. SMM A00 aluminum ingot prices were at a discount of 30 yuan/mt to the SHFE 2501 contract, down 10 yuan/mt from the previous trading day, while SMM A00 aluminum ingot prices stood at 19,640 yuan/mt, flat from the previous trading day.

In the central China market, daily inventory in major warehouses decreased by 4,900 mt to 63,900 mt. With environmental protection measures fully lifted and some small and medium-sized enterprises stocking up ahead of the holiday, spot aluminum circulation tightened, boosting traders' confidence to stand firm on quotes. However, with a new round of environmental protection measures potentially starting, the market is expected to weaken again under the holiday atmosphere. Today, the Henan-Shanghai price spread narrowed to a discount of around 60 yuan/mt. SMM central China A00 aluminum ingot prices were recorded at 19,580 yuan/mt, up 20 yuan/mt from the previous trading day, with actual market transactions at a premium of around 20 yuan/mt to SMM central China prices, up 10 yuan/mt from the previous trading day.

Regarding inventory, daily inventory in SMM's major aluminum consumption regions stood at 333,800 mt, down 15,700 mt MoM. In the short term, the 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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