High Aluminum Prices Suppress Processing Enterprises' Restocking Demand, Overall Market Trading Sentiment Weak [SMM Spot Aluminum Midday Review]

SMM January 29:

SHFE aluminum 2602 fluctuated downward in the morning session, with the price center significantly higher than the previous trading day. High aluminum prices and downstream Chinese New Year break led to weak overall market purchase willingness. The mainstream transaction was concentrated at discounts of 10 yuan/mt to 30 yuan/mt. Today, the east China market selling sentiment index was 2.75, down 0.01 WoW; the buying sentiment index was 2.23, down 0.03 WoW. SMM A00 aluminum closed at 24,860 yuan/mt, up 600 yuan/mt from the previous trading day, at a discount of 200 yuan/mt against the 2602 contract, down 20 yuan/mt from the previous trading day.

Aluminum prices surged significantly today. High prices suppressed restocking demand from processing enterprises, coupled with intensified environmental protection-driven production restrictions in central China, keeping downstream purchase willingness low. However, after the market opened, traders' hedging positions made substantial purchases, filling the gap and driving spot premiums/discounts up slightly from extreme lows to a reasonable range. Quotations varied significantly between large and small traders. Ultimately, central China market offers ranged from a discount of 20 yuan to a discount of 80 yuan against the central China price, with actual transaction prices mainly between a discount of 30 yuan and a discount of 50 yuan against the central China price. Today, the central China market selling sentiment index was 2.88, down 0.01 WoW; the buying sentiment index was 2.45, up 0.58 WoW. SMM central China closed at 24,690 yuan/mt, up 570 yuan/mt from the previous trading day, at a discount of 370 yuan/mt against the 2602 contract, down 50 yuan/mt from the previous trading day. The Henan-Shanghai price spread was -170 yuan/mt, widening by 30 yuan/mt from the previous trading day.

Inventory side, aluminum ingot inventory in major consumption areas increased by 1,000 mt WoW, with the main inventory buildup locations being Wuxi and Gongyi. In the short term, high aluminum prices may continue to suppress end-use demand, and combined with the impact of the downstream Chinese New Year break, aluminum ingots still face inventory buildup risks. Spot premiums/discounts are expected to remain under pressure.