Low Inventory Levels Stimulate Downstream Purchases; Spot Aluminum Transactions in East China Performed Well Today [SMM Spot Aluminum Midday Review]

Published: Jan 17, 2025 13:42

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[SMM Spot Aluminum Midday Review: Low Inventory Stimulates Downstream Purchases, Spot Aluminum Transactions in East China Performed Well Today]

SMM, January 17—In the early trading session today, SHFE aluminum front-month contract fluctuated upward, with its center moving higher. Social inventory of aluminum ingots continued to decline. Coupled with the approach of the weekend, downstream buying sentiment increased, spot discounts narrowed, and transactions were relatively active. Specifically, trading in east China was robust, mainly due to the continuous destocking of social inventory and insufficient arrivals in north-west China, leading to tight market supply. Traders were purchasing for long-term contracts, and downstream stockpiling demand remained, which stimulated the narrowing of spot discounts. Today, SMM A00 aluminum ingot was at a discount of 80 yuan/mt against the SHFE 2502 contract, up 10 yuan/mt from the previous trading day. SMM A00 aluminum ingot prices stood at 20,340 yuan/mt, up 140 yuan/mt from the previous trading day. In the central China market, the operating rate of downstream plate/sheet, strip, and foil was moderate, mainly due to the delivery of pre-holiday extrusion orders. Additionally, environmental protection-related production cuts in Gongyi from January 10-20 prompted downstream players to stockpile raw materials in advance. Today, the price spread between Henan and Shanghai was around a discount of 120 yuan/mt. SMM Central China A00 aluminum ingot prices against the SHFE 2502 contract recorded 20,220 yuan/mt, up 130 yuan/mt from the previous trading day, with actual market transactions mainly at SMM Central China -10 yuan/mt to parity. In terms of inventory, according to SMM's domestic daily social inventory data for aluminum ingots, as of January 17, daily inventory buildup was 1,000 mt, reaching 308,100 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 accumulation trend next week, with regional premiums and discounts likely to weaken. Source: SMM》Subscribe to view SMM historical spot metal prices

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