Transactions in the Central China Market Cooled Down Again, Sentiment in the East China Market Remained Weak [SMM Spot Aluminum Midday Review]

SMM December 24:

The SHFE aluminum 2601 contract fluctuated upward in the morning session. Trading sentiment in the east China market remained weak, as some companies suspended trade for year-end settlement and account closing, leading to a decline in both buying and selling sentiment. Market offers were mainly at a discount of 20 yuan/mt to a premium of 10 yuan/mt against the SMM average, with mainstream transactions occurring between a discount of 10 yuan/mt and the average. Approaching year-end, both selling and purchasing sentiment were weak. Today, the selling sentiment index in the east China market was 2.38, down 0.03 MoM; the buying sentiment index was 2.34, down 0.04 MoM. SMM's A00 aluminum price was quoted at 22,030 yuan/mt, up 160 yuan/mt from the previous trading day, at a discount of 170 yuan/mt against the 2601 contract, unchanged from the previous day.

Trading in the central China market cooled again today. With current premiums and discounts relatively wide, the rebound in aluminum prices, coupled with lingering impacts from environmental protection inspections in the central China region, kept downstream purchasing sentiment persistently low. Some suppliers reported that large buyers were purchasing, but actual trading volume was limited. Final transaction prices mainly ranged from a discount of 20 yuan/mt to a premium of 10 yuan/mt against the central China price. Today, the selling sentiment index in the central China market was 2.77, up 0.02 MoM; the buying sentiment index was 2.25, down 0.19 MoM. SMM's central China aluminum price closed at 21,870 yuan/mt, up 160 yuan/mt from the previous trading day, at a discount of 330 yuan/mt against the 2601 contract, unchanged from the previous day; the price spread between Henan and Shanghai was -160 yuan/mt, also stable.

Inventory side, aluminum ingot inventory in major consumption areas increased by 1,500 mt WoW on Wednesday, mainly due to resumed shipments from Xinjiang last week arriving this week, combined with weaker year-end consumption, leading to a rise in aluminum ingot inventory. In the short term, high aluminum prices may continue to suppress end-use demand, posing a risk of inventory buildup for aluminum ingots, and expectations for spot premiums and discounts to remain under pressure in the near term are unchanged.