The center of aluminum prices declined compared to the previous day, while market trading sentiment saw a slight increase. [SMM Spot Aluminum Midday Review]

SMM February 3:

SHFE aluminum 2602 contract fluctuated in morning trading, with the price center lower than the previous trading day. Affected by the decline in aluminum prices, overall market buying sentiment increased slightly. However, constrained by the approaching Chinese New Year break, overall downstream purchasing sentiment remained at a low level. Mainstream market transactions were concentrated at a discount of 10 yuan/mt to a premium of 10 yuan/mt. Today, the east China market selling sentiment index was 2.74, up 0.11 WoW; the buying sentiment index was 2.35, up 0.16 WoW. SMM A00 aluminum closed at 23,290 yuan/mt, down 410 yuan/mt from the previous trading day, at a discount of 220 yuan/mt against the 2602 contract, flat from the previous trading day.

Today, aluminum prices continued to decline from the previous day. Downstream aluminum processing enterprises in central China are expected to start the Chinese New Year break, reducing their willingness to stockpile raw materials. However, traders' bullish sentiment supported purchasing demand, leading to a slight strengthening in overall buying sentiment. On the selling side, holders mainly adopted a wait-and-see approach, with overall selling sentiment flat WoW. Final actual transaction prices in the central China market ranged from a premium of 10 yuan to a premium of 60 yuan against the central China price. Today, the central China market selling sentiment index was 2.75, flat WoW; the buying sentiment index was 2.30, up 0.05 WoW. SMM central China closed at 23,160 yuan/mt, down 370 yuan/mt from the previous trading day, at a discount of 350 yuan/mt against the 2602 contract, narrowing by 40 yuan/mt from the previous trading day. The Henan-Shanghai price spread was -130 yuan/mt, narrowing by 40 yuan/mt from the previous trading day.

Inventory side, aluminum ingot inventory in major consumption areas increased by 15,000 mt WoW, with the main sources of inventory buildup being Wuxi and Gongyi. In the short term, high aluminum prices may continue to suppress end-use demand, coupled 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.