Spot cargo trading sentiment rises, premiums and discounts narrow slightly [SMM Spot Aluminum Midday Review]

SMM February 25:

SHFE aluminum 2602 fluctuated upward in the morning session, with the price center slightly lower than the previous trading day. Affected by the spot-futures price spread and price spread between futures contracts, some traders entered the market to build positions, and spot premiums/discounts narrowed. Mainstream quotations were concentrated at the average price to a premium of 20 yuan/mt. Today, the east China market shipment sentiment index was 2.66, up 0.32 WoW; the purchase sentiment index was 2.62, up 0.31 WoW. SMM A00 aluminum was quoted at 23,380 yuan/mt, down 10 yuan/mt from the previous trading day, at a discount of 200 yuan/mt against the 2603 contract, up 10 yuan/mt from the previous trading day.

Trading sentiment in the central China market slightly recovered today. Following the Chinese New Year break, traders and downstream processing enterprises gradually resumed operations. Market trading atmosphere improved but overall remained relatively sluggish. Downstream enterprises preferred to restock at low prices, but holders showed strong willingness to hold prices firm. Ultimately, actual transaction prices in the central China market ranged from a premium of 10 yuan to a discount of 20 yuan against the central China price, indicating relatively firm prices. Today, the central China market shipment sentiment index was 2.54, up 0.02 WoW; the purchase sentiment index was 2.16, up 0.02 WoW. SMM central China closed at 23,300 yuan/mt, down 10 yuan/mt from the previous trading day, at a discount of 280 yuan/mt against the 2603 contract, up 10 yuan/mt from the previous trading day. The Henan-Shanghai price spread was -80 yuan/mt, flat from the previous trading day.

Inventory side, aluminum ingot inventory in major consumption areas increased by 24,000 mt WoW. Affected by the downstream Chinese New Year break, all three regions showed inventory buildup. 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.