Active Trading in East China as Spot Discounts Narrow Significantly [SMM Spot Aluminum Midday Review]

Published: Jan 21, 2025 13:38

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[SMM Spot Aluminum Midday Review: Active Trading in East China, Spot Discounts Narrow Significantly]

SMM, January 21 - This morning, the SHFE aluminum front-month contract fluctuated. On the fundamentals, aluminum ingot social inventory shifted to an inventory buildup, while inventory in Wuxi continued to decline. Market buying sentiment improved, spot discounts narrowed, and trading was active.

Specifically, trading in east China was robust, mainly due to the ongoing inventory reduction in Wuxi, coupled with insufficient arrivals in north-west China, leading to tight market supply. Traders were purchasing to fulfill long-term contracts, and downstream stockpiling demand remained, driving spot discounts to narrow. Today, SMM A00 aluminum recorded a discount of 50 yuan/mt against the SHFE 2502 contract, up 10 yuan/mt from the previous trading day. SMM A00 aluminum ingot was priced at 20,320 yuan/mt, up 60 yuan/mt from the previous trading day.

In the central China market, downstream buying sentiment weakened as the Chinese New Year break approached. Some enterprises took the opportunity for technological transformation, reducing their purchasing willingness. Traders accelerated shipments, leading to an expansion in discounts in the central China market. Today, the Henan-Shanghai price spread showed a discount of around 140 yuan/mt. SMM Central China A00 aluminum recorded 20,180 yuan/mt against the SHFE 2502 contract, up 60 yuan/mt from the previous trading day. Actual market transactions were mainly at SMM Central China -20 to -10 yuan/mt.

Regarding inventory, according to SMM's daily aluminum ingot inventory data for three domestic regions, as of January 21, inventory increased by 100 mt to 318,400 mt. In the short term, earlier in-transit cargoes gradually entered warehouses, coupled with downstream entering the Chinese New Year holiday, marking a turning point in social inventory. However, the continuous inventory reduction in Wuxi supported regional premiums and discounts. Future attention should focus on arrivals in east China and changes in downstream demand.

Data Source: SMM
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Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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