SHFE aluminum falls, spot aluminum trading sentiment diverges in east China and central China [SMM Spot Aluminum Midday Review]

SMM Feb. 6:

SHFE aluminum 2602 fluctuated downward in the morning session, with the price center lower than the previous trading day. Affected by the decline in aluminum prices, overall market procurement sentiment rose, narrowing the overall market spot premiums/discounts. Mainstream transaction prices concentrated at a premium of 10 yuan/mt to 30 yuan/mt. Today, the east China market shipment sentiment index was 2.84, flat MoM; the purchase sentiment index was 2.80, up 0.11 MoM. SMM A00 aluminum closed at 23,340 yuan/mt, down 420 yuan/mt from the previous trading day, at a discount of 180 yuan/mt against the 2602 contract, up 30 yuan/mt from the previous trading day.

Today, trading in the central China market turned sluggish. As the Chinese New Year break approaches, downstream processors were near completion of stockpiling, maintaining only small-volume just-in-time procurement, with only some traders restocking on dips. Suppliers' willingness for year-end capital collection weakened compared to the previous day, leading to sluggish market activity. Final actual transaction prices in the central China market ranged from parity to a premium of 30 yuan/mt against the central China price. Today, the central China market shipment sentiment index was 2.69, down 0.05 MoM; the purchase sentiment index was 2.17, down 0.05 MoM. SMM central China aluminum closed at 23,240 yuan/mt, down 400 yuan/mt from the previous trading day, at a discount of 280 yuan/mt against the 2602 contract, up 50 yuan/mt from the previous trading day. The Henan-Shanghai price spread was -100 yuan/mt, narrowing 20 yuan/mt from the previous trading day.

Inventory side, aluminum ingot inventory in major consumption areas decreased by 2,000 mt MoM today, with the destocking mainly from 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.