Inventory Continues Destocking as Suppliers' Sentiment to Stand Firm on Quotes Strengthens [SMM Spot Aluminum Midday Review]

This morning, the center of SHFE aluminum front-month contract rose to around 19,750 yuan/mt. In the spot market, some enterprises in east China have gradually entered the Chinese New Year holiday mode, leading to weakening demand. However, due to limited market arrivals and factors such as refined-scrap substitution, inventory was reduced, boosting suppliers' confidence to stand firm on quotes. SMM A00 aluminum ingot prices were at a discount of 30 yuan/mt to the SHFE aluminum 2501 contract, flat from the previous trading day. SMM A00 aluminum ingot prices stood at 19,670 yuan/mt, up 30 yuan/mt from the previous trading day.

In the central China market, mainstream warehouse weekly inventory decreased by 12,000 mt to 63,000 mt. With the full lifting of environmental protection measures and pre-holiday restocking by some small and medium-sized enterprises, spot supply tightened, prompting suppliers to raise prices. Premiums in central China rose significantly. Today, the Henan-Shanghai price spread narrowed to a discount of around 40 yuan/mt. SMM Central China A00 aluminum ingot prices stood at 19,630 yuan/mt, up 50 yuan/mt from the previous trading day. Actual market transactions were at a premium of 30-40 yuan/mt to SMM Central China prices, up 20 yuan/mt from the previous trading day.

In terms of inventory, weekly inventory in SMM's major aluminum consumption regions recorded 459,000 mt, down 36,000 mt WoW. In the short term, the inventory decline has bolstered traders' confidence to stand firm on quotes. However, with increased arrivals next week and the deepening off-season, market consumption is expected to weaken gradually, outflows from warehouses may decline, and regional premiums and discounts are likely to weaken.

Data Source: SMM

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