Market activity remained subdued, with premiums struggling to rise [SMM Spot Aluminum Midday Review]

SMM September 1: The SHFE aluminum front-month contract fluctuated rangebound in early trading, with its price center dropping to around 20,600 yuan/mt. Despite the lower aluminum price center, market activity remained sluggish, with transactions mainly focused on selling and settled at slight discounts. After 9:30 am, as the aluminum price center continued to decline, buying sentiment improved slightly, and premiums and discounts gradually stabilized, shifting to transactions at the SMM average price. Today, the east China market selling sentiment index stood at 3.06, up 0.02, while the purchasing sentiment index was 2.84, up 0.11. SMM spot A00 aluminum was quoted at 20,620 yuan/mt, down 110 yuan/mt from the previous trading day, at a 30 yuan/mt discount to the SHFE 2509 contract, narrowing by 10 yuan/mt.

In central China, despite the lower aluminum price center, market activity remained subdued due to Monday effects and environmental protection-related production reduction risks, with just-in-time procurement dominating. Today, the central China selling sentiment index was 2.96, down 0.05, while the purchasing sentiment index was 2.95, down 0.04. SMM central China A00 aluminum was quoted at 20,490 yuan/mt against the SHFE 2509 contract, down 100 yuan/mt from the previous trading day, at a 160 yuan/mt discount to the front-month contract, unchanged from the previous day.

Inventory-wise, SMM's weekly social aluminum ingot inventory registered 623,000 mt, up 3,000 mt WoW. In the short term, the inventory buildup pace continues to pressure spot premiums, but with the off-season gradually fading, downside room for premiums appears limited.