Aluminum Market Inventory at High Levels, Spot Discounts Expected to Worsen [SMM Spot Aluminum Midday Review]

This morning, the SHFE aluminum front-month contract hovered below the daily moving average around 20,600 yuan/mt. In the east China market, inventory pressure persisted, and downstream buying was mainly driven by rigid demand, with discounts slightly widening. The SMM A00 aluminum ingot price was at a discount of 60 yuan/mt to the SHFE 2503 contract, down 10 yuan/mt from the previous trading day, recording 20,510 yuan/mt, a decrease of 30 yuan/mt from the previous trading day.

In the central China market, snowfall in Qinghai reignited concerns over supply, but actual downstream transactions showed no significant improvement. Due to the impact of absolute prices, end-user enterprises mostly adopted a wait-and-see approach, and shipments from processing material enterprises showed little progress. During the day, trading activity was relatively active among traders due to concerns. The SMM central China A00 aluminum ingot price was recorded at 20,380 yuan/mt against the SHFE 2503 contract, down 30 yuan/mt from the previous trading day, with actual transactions in the market ranging from parity to a premium of 10 yuan/mt over the SMM central China price.

Regarding inventory, the SMM daily inventory in major aluminum consumption regions recorded 679,200 mt, with an inventory buildup of 9,100 mt. The absolute inventory level continued to rise, putting pressure on spot premiums. Downstream consumption of aluminum processing has not yet recovered, and downstream sectors are still digesting finished goods and raw material inventories amid high aluminum prices. Under the oversupply situation, spot market discounts are expected to widen further in the short term.

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