Aluminium ingot inventory has not yet dropped

On Mar 21, 2024, SMM data showed that the social inventory of aluminum ingots in China’s eight major markets was 851,000 mt, (the amount for sale stood at 725,000 mt), up 8,000 mt WoW, up 4,000 mt from Mar 18, and 360,000 mt higher than pre-CNY holiday level, remaining at the lowest compared to the same period of past seven years. The inventory growth since mid-March almost stagnated but inventories have not yet dropped, mainly due to huge inventory pressure in south China. The outflows of aluminum ingots from warehouses in the fourth week after CNY was 109,000 mt, down 6,900 mt WoW. According to SMM research, there are few cargoes in transit by railway, and the downstream operating rate rose in March. With the arrival of the traditional peak seasons, the outflow from warehouses improved. Although imported goods constrained outflow from warehouse last week, SMM believes inventory will begin to drop in the short term. Yunnan aluminium smelters have begun to resume production, which has not yet had an impact on the domestic social inventory. It will only drive the arrivals in south China to pick up slightly in April, and the overall impact on domestic inventories is relatively limited. SMM predicts that domestic aluminum ingot inventories will maintain stable operation in the second half of March before they begin to drop. The peak of inventories after CNY holiday may be around 850,000-900,000 mt. However, the inventory decline in the bonded areas, inflow of imported goods, and supplies from southwest China arriving in south China deserve attention. High aluminum prices also significantly suppressed the outflow from warehouses.