Affected by high aluminum prices, market trading sentiment remains relatively weak. [SMM Spot Aluminum Midday Review]

SMM January 31:

The SHFE aluminum 2601 contract rose sharply in the morning session, with the price center moving higher compared to the previous trading day. Overall, trading volume increased due to the recovery from year-end closing. However, the rise in SHFE aluminum prices limited the extent of improvement in market sentiment. Today, mainstream transaction prices mainly ranged from a discount of 10 yuan/mt to parity against the SMM average price. The east China market selling sentiment index was 2.08, up 0.09 MoM; the purchasing sentiment index was 2.15, up 0.04 MoM. SMM A00 aluminum was quoted at 23,310 yuan/mt, up 850 yuan/mt from the previous trading day, at a discount of 220 yuan/mt against the 2601 contract, down 10 yuan/mt from the previous trading day.

Aluminum prices surged rapidly today. Trading sentiment in the central China market remained sluggish. Although environmental protection-driven production restrictions for downstream processing enterprises ended, high absolute aluminum prices led to weak demand. Some enterprises restocked slightly during the New Year holiday and are currently consuming existing inventory, resulting in low trading volume. Traders purchased for hedging purposes, with buyers preferring large discounts. However, major holders maintained firm prices due to bullish views. Ultimately, actual transaction prices in the central China market ranged from a premium of 10 yuan/mt to a discount of 30 yuan/mt against the central China price. The central China market selling sentiment index was 2.49, down 0.18 MoM; the purchasing sentiment index was 1.96, up 0.46 MoM. SMM central China aluminum price closed at 23,080 yuan/mt, up 840 yuan/mt from the previous trading day, at a discount of 450 yuan/mt against the 2601 contract, down 20 yuan/mt from the previous trading day; the Henan-Shanghai price spread was -230 yuan/mt, down 10 yuan/mt from the previous trading day.

Inventory side, aluminum ingot inventories in major consumption areas increased by 20,500 mt WoW on Wednesday. Guangdong, Gongyi, and Wuxi all showed inventory buildup trends. In the short term, high aluminum prices may continue to suppress end-use demand, and aluminum ingots still face inventory buildup risks. Spot premiums/discounts are expected to remain under pressure.