SMM Feb. 4:
SHFE aluminum 2602 fluctuated upward in the morning session, with the price center rising from the previous trading day. Following the slow rise after the price limit down, overall bullish sentiment among downstream players increased, and buying sentiment improved today. The mainstream transaction prices were concentrated at parity to a premium of 30 yuan/mt. The willingness to sell index in the east China market was 2.85 today, up 0.12 MoM; the purchase willingness index was 2.54, up 0.20 MoM. SMM A00 aluminum closed at 23,760 yuan/mt, up 470 yuan/mt from the previous trading day, at a discount of 210 yuan/mt against the 2602 contract, up 10 yuan/mt from the previous trading day.
In the central China market, pre-holiday stockpiling by downstream processing enterprises neared its end, and weakening end-use consumption reduced purchase willingness among processors. The rebound in aluminum prices also dampened traders' demand for restocking on dips. Overall buying sentiment in the central China market weakened, while some suppliers increased their willingness to sell due to year-end payment collection needs. Actual transaction prices in the central China market finally ranged from parity to a premium of 30 yuan/mt against the central China price. The willingness to sell index in the central China market was 2.78 today, up 0.03 MoM; the purchase willingness index was 2.28, down 0.02 MoM. SMM central China aluminum closed at 23,640 yuan/mt, up 480 yuan/mt from the previous trading day, at a discount of 330 yuan/mt against the 2602 contract, up 20 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was -120 yuan/mt, narrowing by 10 yuan/mt from the previous trading day.
Inventory side, aluminum ingot inventory in major consumption areas decreased by 1,500 mt MoM today, with Wuxi being the main source of destocking. In the short term, high aluminum prices may continue to suppress end-use demand, and coupled with the impact of the Chinese New Year break on downstream operations, aluminum ingots still face inventory buildup risks. Spot premiums/discounts are expected to remain under pressure.
