Aluminum Prices Plunge, Strong Selling Sentiment in the Market [SMM Spot Aluminum Midday Commentary]

SMM, March 6:

In early trading, SHFE aluminum 2603 fluctuated upward, while the price center fell sharply from the previous trading day. Downstream processing enterprises were bullish on the aluminum price outlook and proactively restocked, with strong willingness to purchase; traders mainly focused on converting shipments into cash and reducing open interest. Today’s market transactions were done at the average price to 30 yuan/mt. Today, the east China market shipment sentiment index was 3.11, up 0.13 MoM; the purchasing sentiment index was 2.76, down 0.2 MoM.

The direction of geopolitical tailwinds remained unclear, and aluminum prices stopped rising and pulled back in the short term. In the central China market, traders remained strongly bullish and tended to take the opportunity to purchase at lower prices, while suppliers were mostly on the sidelines with low willingness to sell. Circulating supply was relatively tight, driving premiums to continue rising. Quotes climbed from a premium of 20 yuan/mt over the central China price before the open to a premium of 50 yuan/mt, and the final actual mainstream transaction prices were around a premium of 20–30 yuan/mt over the central China price. Today, the central China market shipment sentiment index was 2.66, down 0.1 MoM; the purchasing sentiment index was 2.41, up 0.01 MoM.

Inventory side, today’s aluminum ingot inventory in major consumption areas increased 2,000 mt MoM, with the inventory buildup mainly coming from Wuxi and Guangdong. In the short term, after the Chinese New Year, aluminum ingots continued to see seasonal inventory buildup; affected by bullish sentiment, premiums were expected to remain in a narrowing trend.