As aluminium prices experienced a correction, spot discounts remained under pressure

SHFE aluminium 2602 fluctuated downward in the morning session, with the price centre lower than the previous trading day. Due to high aluminium prices and the Chinese New Year break at downstream processing enterprises, overall market buying sentiment remained weak.

The mainstream transaction prices were concentrated at discounts of RMB 10 per tonne to RMB 30 per tonne. Today, the East China market selling sentiment index was 2.53, down 0.22 W-o-W; the buying sentiment index was 2.13, down 0.1 W-o-W. SMM A00 aluminium closed at RMB 24,660 per tonne, down RMB 200 per tonne from the previous trading day, at a discount of RMB 210 per tonne against the 2602 contract, down RMB 10 per tonne from the previous trading day.

Aluminium prices pulled back after the rally, and as the latest round of environmental protection-related controls in Henan entered its final stage, downstream processing enterprises took the opportunity to restock slightly, while traders continued to actively purchase for hedging purposes, leading to a slight improvement in market buying sentiment.

The actual transaction prices in the central China market eventually stabilised within the range of a RMB 20 per tonne to RMB 40 per tonne discount to the central China price. Today, the central China market selling sentiment index was 2.91, up 0.02 W-o-W; the buying sentiment index was 2.46, up 0.01 W-o-W.

SMM central China closed at RMB 24,480 per tonne, down RMB 210 per tonne from the previous trading day, at a discount of RMB 390 per tonne against the 2602 contract, down RMB 20 per tonne from the previous trading day. The Henan-Shanghai price spread was RMB 180 per tonne, widening by RMB 10 per tonne from the previous trading day.

On the inventory side, aluminium ingot inventory in major consumption areas increased by 6,500 tonnes W-o-W, with all three regions experiencing inventory buildup.

In the short term, high aluminium prices may continue to suppress end-use demand, coupled with the impact of the downstream Chinese New Year break, aluminium ingots still face inventory buildup risks, and spot premiums/discounts are expected to remain under pressure.

Note: This article has been issued by SMM and has been published by AL Circle with its original information without any modifications or edits to the core subject/data.

Image credit: https://thechemicalelements.com/