Dual Highs Suppress Demand, Spot Aluminum Trading in South China Cools Down [SMM South China Spot Aluminum Daily Review]

SMM Jan. 12:

In South China's aluminum ingot market, the average SMM A00 aluminum (Foshan) price was 24,390 yuan/mt on Jan. 12, up 290 yuan/mt on the day, at a discount of 45 yuan/mt against the front-month contract, widening 20 yuan/mt from the previous day. With aluminum prices hitting a record high and the spot-futures price spread remaining elevated, suppliers enjoyed ample profit margins under the dual-high pattern and showed strong willingness to accelerate cash-out, actively lowering offers to a discount range of 30 yuan/mt to parity. Market circulation volume increased noticeably. However, downstream buyers lacked the strength to chase higher prices and scaled back procurement, while traders showed a strong fear of high prices, purchasing only as needed and pushing for lower prices, leading to an oversupply situation in the market. Subsequent futures price fluctuations prompted suppliers to adjust prices, with only sporadic buyers restocking.

In South China's aluminum billet market, processing fees for SMM 6063 aluminum billet (Guangdong) across specifications came under significant pressure and pulled back on Jan. 12, with the average for Φ90/100 at -110 yuan/mt and for Φ120 and above at -160 yuan/mt, down 50 yuan/mt from the previous day. The aluminum billet market also faced pressure today; after the base price surged to a new high, processing fees continued to decline, downstream fear of high prices intensified, procurement demand remained weak with increased pressure for lower prices, forcing suppliers to deepen discounts and offer volume discounts, resulting in a challenging overall transaction atmosphere.