As the Chinese New Year holiday approaches, the spot aluminum transaction discount continues to widen [SMM Spot Aluminum Midday Review]

SMM February 10:

SHFE aluminum 2602 fluctuated downward in the morning session, with the price center lower than the previous trading day. Affected by the approaching Chinese New Year, overall market procurement sentiment was weak, prompting sellers to lower prices. Mainstream transaction prices were concentrated at discounts of 20 yuan/mt to 10 yuan/mt. Today, the east China market shipment sentiment index was 2.7, down 0.08 WoW; the purchase sentiment index was 2.5, down 0.11 WoW. On February 10, SMM A00 aluminum closed at 23,290 yuan/mt, down 110 yuan/mt from the previous trading day, at a discount of 190 yuan/mt against the 2602 contract, down 20 yuan/mt from the previous trading day.

Transactions in the central China market remained sluggish today. As the Chinese New Year holiday approaches, pre-holiday stockpiling by downstream processing enterprises has basically ended, with only a small amount of just-in-time procurement and some traders buying the dip for stockpiling. Suppliers initially showed weak willingness to hold prices firm, but with sluggish transactions, actual transaction prices in the central China market hovered between parity and a discount of 20 yuan/mt against the central China price. Today, the central China market shipment sentiment index was 2.72, down 0.01 WoW; the purchase sentiment index was 2.16, down 0.01 WoW. SMM central China closed at 23,170 yuan/mt, down 110 yuan/mt from the previous trading day, at a discount of 310 yuan/mt against the 2602 contract, down 20 yuan/mt from the previous trading day. The Henan-Shanghai price spread was -120 yuan/mt, flat from the previous trading day.

Inventory side, aluminum ingot inventory in major consumption areas increased by 4,500 mt WoW today, with the main sources of inventory buildup being Guangdong and Wuxi. In the short term, high aluminum prices may continue to suppress end-use demand, coupled with the impact of the Chinese New Year break on downstream operations. Aluminum ingots still face inventory buildup risks, and spot premiums/discounts are expected to remain under pressure.