Holders Concentrated on Offloading, Spot Discounts Widened [SMM Spot Aluminum Midday Review]

SMM December 17:

The SHFE aluminum 2601 contract's trading center shifted upward during the morning session. The rise in absolute prices, combined with year-end sales for cash flow, prompted holders to offload goods collectively, leading to relatively ample supply in the spot market. Sellers lowered their offers, with quotations at discounts of 30 to 10 yuan/mt against the SMM average price. Buyers purchased cautiously, with large transactions mostly concentrated around discounts of 20 to 10 yuan/mt. Today, the selling sentiment index in the east China market was 2.63, down 0.20 MoM; the purchasing sentiment index was 2.51, down 0.07 MoM. SMM A00 aluminum was quoted at 21,750 yuan/mt, up 120 yuan/mt from the previous trading day, at a discount of 110 yuan/mt against the 2601 contract, down 10 yuan/mt from the previous trading day.

Trading in the central China market was relatively sluggish today. Downstream processing enterprises showed weak purchase willingness, leading to subdued purchasing activity among traders. Holders sold off large quantities, but market trading volume remained low, and offers continued to decline. Eventually, the actual transaction price fell from a premium of 10 yuan/mt against the central China price before the market opened to a discount of 20 yuan/mt. Today, the selling sentiment index in the central China market was 2.74, up 0.02 MoM; the purchasing sentiment index was 2.69, down 0.02 MoM. SMM central China aluminum closed at 21,670 yuan/mt, up 110 yuan/mt from the previous trading day, at a discount of 190 yuan/mt against the 2601 contract, down 20 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was -80 yuan/mt, down 10 yuan/mt from the previous trading day.

Inventory side, aluminum ingot inventory in major consumption areas destocked by 10,500 mt WoW on Wednesday. In the short term, the pullback in absolute prices supports sellers' willingness to hold prices firm, but weakening demand and reduced purchase willingness from downstream buyers are expected to keep spot discounts fluctuating.