East China Spot Sentiment Rises, Discount Range Continues to Narrow [SMM Spot Aluminum Midday Review]

SMM January 9:

The SHFE aluminum 2601 contract fluctuated upward in the morning session, but the price center was slightly lower than the previous trading day. Affected by the spot-futures price spread, traders' buying sentiment improved. Today, the overall market's willingness to sell also rebounded. Mainstream transaction prices were mainly in the range of a premium of 30 yuan/mt to 50 yuan/mt against the SMM price. The east China market selling sentiment index was 2.71 today, up 0.33 WoW; the buying sentiment index was 2.83, down 0.15 WoW. SMM A00 aluminum was quoted at 24,030 yuan/mt, up 30 yuan/mt from the previous trading day, at a discount of 100 yuan/mt against the 2601 contract, narrowing by 50 yuan/mt from the previous trading day.

In the central China market today, the willingness to sell rebounded slightly, and premiums/discounts continued to recover. Some holders showed stronger willingness to sell, while hedging-related purchases remained the mainstream trend. However, the number of buyers decreased, driving market transaction prices higher before a slight pullback. After the SMM indicative price was issued, market sentiment weakened significantly. Final actual transaction prices in the central China market ranged from a premium of 10 yuan to 70 yuan against the central China price. The central China market selling sentiment index was 2.48 today, down 0.01 WoW; the buying sentiment index was 2.13, up 0.01 WoW. SMM central China aluminum price closed at 23,860 yuan/mt, up 50 yuan/mt from the previous trading day, at a discount of 270 yuan/mt against the 2601 contract, up 70 yuan/mt from the previous trading day; the Henan-Shanghai price spread was -170 yuan/mt, up 20 yuan/mt from the previous trading day.

Inventory side, aluminum ingot inventory in major consumption areas decreased by 3,500 mt WoW on Wednesday, with Guangdong and Gongyi showing destocking, while Wuxi was the main source of inventory buildup. In the short term, high aluminum prices may continue to suppress end-use demand, aluminum ingots still face inventory buildup risks, and spot premiums/discounts are expected to remain under pressure.