Inventory Turning Point Failed to Materialize, Aluminum Billet Market Remained Sluggish [SMM Aluminum Billet Weekly Review]

SMM News, March 5:

According to SMM statistics, as of March 5, aluminum billet inventory in China’s major domestic consumption hubs totaled 398,000 mt. Inventory first increased and then declined, still hovering around 400,000 mt. Across the major consumption hubs, regional divergence persisted. Foshan continued to see an inventory buildup, with aluminum billet inventory up 12,500 mt WoW to 171,500 mt. The pace of inventory buildup slowed slightly, but local warehousing capacity was nearing saturation, and some warehouses announced a suspension of warehouse inflows, leaving part of the locally backlogged inventory unable to be reflected. Wuxi inventory fell 4,000 mt WoW to 142,000 mt, while Nanchang inventory fell 2,000 mt WoW to 13,500 mt. Although inventories in both regions edged down, Wuxi should pay attention to shipment conditions for Xinjiang aluminum billet, while Nanchang was affected by maintenance-related production cuts at aluminum billet producers in Qinghai in February, resulting in relatively limited warehouse inflows. Although inventories showed slight signs of easing during the week, an inflection point has yet to be established. On the one hand, aluminum billet producers are set to resume production in March, leaving the supply side still under heavy pressure; on the other hand, after the holiday, the resumption pace at downstream traditional extrusion plants remained limited, and acceptance of the current wildly swinging yet persistently high aluminum prices was still only average, with a recovery in rigid demand needing end-user orders to gain momentum. Given the current supply-demand imbalance, aluminum billet inventory in March is expected to remain within 350,000-450,000 mt, and the market needs to watch whether an inventory inflection point can formally take shape.

After the Lantern Festival, downstream extrusion plants resumed operations in a concentrated manner. However, amid a steady stream of overseas news and volatile aluminum prices, downstream purchasing strength was relatively average, keeping aluminum billet processing fees under sustained pressure. In some regions, discounts even emerged and widened, underscoring broad market weakness. By region, Foshan processing fees were quoted at -100/-50, down 210 yuan/mt WoW; Wuxi at -100/-50 yuan/mt, down 180 yuan/mt WoW; and Nanchang at 0/50 yuan/mt, down 150 yuan/mt WoW. The market is still in a phase of high inventory plus weak demand. With fluctuations in aluminum prices, the processing fee structure appears somewhat disordered, with a clear price spread between high and low levels. Aluminum billet processing fees are expected to remain under pressure next week.