Post-Holiday Market Trading Shows Initial Signs of Recovery, but Inventory Buildup Limits Premium Space [SMM Spot Aluminum Midday Review]

In the early trading session today, the center of the SHFE aluminum front-month contract fluctuated upward, breaking through 20,280 yuan/mt at the end of the second session. In the east China market, trading activity recovered compared to the previous day, aluminum prices rebounded, and trading activity increased. However, as consumption by aluminum semis enterprises has not yet recovered, just-in-time procurement after the price rebound was mainly based on the monthly average price, limiting the upward space for spot premiums. SMM A00 aluminum ingot prices were at a discount of 40 yuan/mt to the SHFE aluminum 2502 contract, unchanged from the previous trading day, and recorded at 20,230 yuan/mt, up by 90 yuan/mt from the previous trading day.

In the central China market, trading activity improved during the day, with some traders making purchases amid the discount trend, leading to better transactions compared to the previous trading day. However, downstream processing enterprises have not fully resumed operations, resulting in limited demand recovery. Today, the Henan-Shanghai price spread was at a discount of 130 yuan/mt, unchanged from the previous trading day. SMM central China A00 aluminum ingot prices were recorded at 20,100 yuan/mt, up by 90 yuan/mt from the previous trading day, with actual market transactions ranging from parity to a discount of 20 yuan/mt against SMM central China prices.

Inventory-wise, daily inventory in major aluminum consumption regions monitored by SMM was recorded at 523,000 mt, with an inventory buildup of 14,600 mt. As downstream aluminum processing consumption has not yet recovered, market inventory remains in a continuous buildup phase. Under the oversupply situation, spot premiums/discounts are expected to be more likely to fall than rise.

Data Source: SMM

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