SHFE Aluminum Holds Up Well, Regional Market Differences Evident [SMM Spot Aluminum Midday Review]

SMM January 23:

The SHFE aluminum 2602 contract rose strongly in the morning session, with the price center edging up from the previous trading day. Today, overall market selling sentiment improved slightly, but downstream buying sentiment remained weak. Mainstream transaction prices were mainly at a discount of 10 yuan/mt to parity. The selling sentiment index in east China was 2.96, up 0.03 MoM; the purchasing sentiment index was 2.47, down 0.03 MoM. SMM A00 aluminum closed at 24,110 yuan/mt, up 370 yuan/mt from the previous trading day, at a discount of 150 yuan/mt against the 2602 contract, flat from the previous day.

In central China, selling sentiment weakened today. Some holders maintained a bullish outlook, and trading firms engaging in both spot and futures markets held back from selling, leading to tight spot aluminum supply. As it was the last day for January long-term contracts, traders showed strong purchase willingness, pushing offers higher. However, actual transaction prices mainly ranged from parity to a premium of 20 yuan/mt against the central China price. The selling sentiment index in central China was 2.65, down 0.05 MoM; the purchasing sentiment index was 2.32, up 0.05 MoM. SMM central China aluminum closed at 24,030 yuan/mt, up 380 yuan/mt from the previous trading day, at a discount of 230 yuan/mt against the 2602 contract, up 10 yuan/mt from the previous day. The price spread between Henan and Shanghai was -80 yuan/mt, narrowing by 10 yuan/mt from the previous day.

Inventory side, aluminum ingot inventory in major consumption areas decreased by 1,500 mt MoM, with destocking observed in Wuxi and Gongyi. 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.