Most-traded SHFE aluminum contract fluctuated strongly, and spot premium narrowed slightly on rising aluminium prices

SHANGHAI, JAN 24 (SMM) –In early trading today, most-traded SHFE aluminum contract fluctuated strongly. The spot market in east China rebounded, but the transaction was thin. Moderate downstream demand coupled with an increase in aluminum prices, weakening spot premium in east China. According to SMM statistics, today's aluminum ingot inventory in Wuxi (excluding Hangzhou, Changzhou, Haian and other places) was 107,900 mt, down by 2,500 mt. SHFE aluminum spot import profits stayed at high levels, and some imported goods from the bonded area may flowed into domestic market. SMM A00 aluminum price was at a premium of about 50 yuan/mt over the 2402 contract, down by 10 yuan/mt. The spot price was recorded at 18,980 yuan/mt. During the second trading period, the aluminium prices slightly increased. Spot transaction in east China was at a discount of about 20 yuan/mt to a premium of 10 yuan/mt over SMM A00 aluminium prices.

Today's spot transactions in the central China were moderate. According to SMM statistics, today's aluminum ingot inventory in Gongyi was about 74,600 mt, up by 2,600 mt. The downstream enterprises mainly purchase only as needed. SMM central China aluminium price has a premium of 10 yuan/mt to the 2402 contract, down by 10 yuan/mt. The average spot price was recorded at 18,940 yuan/ton, up by 230 yuan/mt. As aluminum prices increased significantly, the mainstream spot transactions in early trading have a discount of 20 yuan/mt to a premium of about 10 yuan/mt over the central China aluminium price.

Overall, inventory was at a 7-year low. Fundamentally, the supply of domestic aluminum was relatively stable, but import profits were considerable. As the import window opened, we need to be wary of its impact on the domestic market; the consumption has entered the off-season, and there is an expectation of an increase in aluminium ingot production amid weak demand. Recently, the spot import window for aluminum opened, and some imported supplies may enter the domestic market. At the end of the month, the aluminum market may enter the traditional inventory accumulation cycle, which may put some pressure on premiums and discounts. However, in the short term, the current spot inventory continues to be low, lifting spot premiums in east China.