SMM February 2:
SHFE aluminum 2602 fluctuated downward in the morning session, with the price center lower than the previous trading day. The decline in aluminum prices led to a slight increase in purchasing sentiment. However, constrained by the approaching Chinese New Year break, overall downstream procurement sentiment remained low. Mainstream transaction prices were concentrated at a discount of 20 yuan/mt to parity. Today, the sales sentiment index in the east China market was 2.63, up 0.1 WoW; the purchasing sentiment index was 2.18, up 0.05 WoW. SMM A00 aluminum closed at 23,700 yuan/mt, down 960 yuan/mt from the previous trading day, at a discount of 220 yuan/mt against the 2602 contract, down 10 yuan/mt from the previous trading day.
Aluminum prices continued to decline, and with the end of environmental protection-related controls in central China, downstream processing enterprises took the opportunity to restock slightly. However, high aluminum prices coupled with bearish expectations kept overall purchasing sentiment weak. Suppliers exhibited strong wait-and-see sentiment, with a clear intention to hold prices firm and reluctant to sell, leading to cautious circulation of spot cargo in the market. Final actual transaction prices in the central China market ranged from a discount of 10 yuan to a premium of 10 yuan against the central China price. Today, the sales sentiment index in the central China market was 2.75, down 0.15 WoW; the purchasing sentiment index was 2.25, up 0.2 WoW. SMM central China closed at 23,530 yuan/mt, down 950 yuan/mt from the previous trading day, at a discount of 390 yuan/mt against the 2602 contract, flat from the previous trading day. The Henan-Shanghai price spread was -170 yuan/mt, narrowing by 10 yuan/mt from the previous trading day.
Inventory side, aluminum ingot inventory in major consumption areas increased by 29,500 mt WoW, with inventory buildup observed in all three regions. In the short term, high aluminum prices may continue to suppress end-use demand. Combined with the impact of the downstream Chinese New Year break, aluminum ingots still face inventory buildup risks, and spot premiums/discounts are expected to remain under pressure.
