Affected by environmental protection-related controls and high aluminum prices, overall market trading sentiment is weak. [SMM Spot Aluminum Midday Review]

SMM January 28:

SHFE aluminum 2602 contract surged in the morning session, with the price center rising from the previous trading day. High aluminum prices dampened overall stockpiling sentiment among downstream users, resulting in low market trading volume. The mainstream transactions were concentrated at discounts of 10-30 yuan/mt. Today, the selling sentiment index in the east China market was 2.76, down 0.07 MoM, while the purchasing sentiment index was 2.27, up 0.12 MoM. SMM A00 aluminum closed at 24,260 yuan/mt, up 390 yuan/mt from the previous trading day, at a discount of 180 yuan/mt against the 2602 contract, down 10 yuan/mt from the previous trading day.

Trading in the central China market remained sluggish today. Soaring aluminum prices coupled with year-end corporate fund collection needs significantly strengthened suppliers' selling sentiment. However, intensified environmental protection-related controls in many parts of Henan further reduced the operating rates of downstream processing enterprises, leading to weak overall purchasing volume. Although traders showed strong selling sentiment, actual transaction volume was low, with transaction prices continuing to decline, hovering at discounts of 20-60 yuan/mt against the central China price. Today, the selling sentiment index in the central China market was 2.89, up 0.07 MoM, while the purchasing sentiment index was 1.87, down 0.28 MoM. SMM central China aluminum closed at 24,120 yuan/mt, up 360 yuan/mt from the previous trading day, at a discount of 320 yuan/mt against the 2602 contract, down 40 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was -140 yuan/mt, widening by 30 yuan/mt from the previous trading day.

Inventory side, aluminum ingot inventories in major consumption areas decreased by 1,000 mt MoM. Wuxi and Gongyi saw inventory buildup, while Guangdong was the main destocking area. 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.