Overall market buying sentiment declined, discounts in east China and central China continued to widen [SMM Spot Aluminum Midday Review]

SMM January 26:

SHFE aluminum 2602 contract rose first then fell in the morning session, with the price center slightly lower than the previous trading day. Today, overall market trading sentiment weakened, downstream smelters' purchasing enthusiasm was low, and mainstream transaction prices mainly ranged from a discount of 20 yuan/mt to parity. The east China market selling sentiment index was 2.9, down 0.06 WoW; the buying sentiment index was 2.37, down 0.1 WoW. SMM A00 aluminum was quoted at 24,030 yuan/mt, down from the previous trading day.

In the central China market today, downstream processing enterprises faced about 50% production restrictions due to repeated environmental protection-related controls, leading to a significant drop in traders' buying sentiment. However, suppliers showed a strong willingness to sell at high prices, resulting in substantial offerings in the market. Actual transaction prices declined throughout the day, moving from parity with the central China price before the opening to a discount of 30 yuan/mt against the central China price, with a few traders concluding deals at a discount of 50 yuan/mt. The central China market selling sentiment index was 2.83, up 0.02 WoW; the buying sentiment index was 2.28, down 0.05 WoW. SMM central China aluminum closed at 23,940 yuan/mt, down 90 yuan/mt from the previous trading day, at a discount of 250 yuan/mt against the 2602 contract, down 20 yuan/mt WoW. The price spread between Henan and Shanghai was -90 yuan/mt, widening by 10 yuan/mt from the previous trading day.

Inventory side, aluminum ingot stocks in major consumption areas decreased by 36,500 mt WoW, with all three regions experiencing 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.