Steady as It Goes! The Pullback in Domestic Primary Aluminum Billets Production in December Was Less Than Expected [SMM Analysis]

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SMM, January 5:

Calm and steady! Although domestic primary aluminum billet production in December pulled back, the decline was less than expected. Despite the official implementation of the cancellation of aluminum semis export tax rebates in December, coupled with a strong off-season atmosphere downstream, the operating performance of domestic aluminum billet supply was already anticipated to be affected. However, due to the sluggish aluminum prices during the month and the influence of multiple factors, aluminum billet demand remained stable with a weak trend, allowing aluminum billet processing fees to stand firm at high levels, which led to some aluminum billet enterprises increasing their operating rates instead of reducing them. The daily average production of domestic primary aluminum billets decreased by 2,000 mt MoM to around 47,000 mt/day.

According to the latest monthly survey data from SMM, the number of enterprises in the SMM primary aluminum billet monthly survey sample currently totals 169, with a total capacity of 31.205 million mt, unchanged MoM. In December 2024 (31 days), the total national production of primary aluminum billets was 1.465 million mt, down 12,000 mt MoM from November 2024 (30 days), a decrease of 0.81%; YoY, it increased by 162,000 mt, a growth of 12.4%. The domestic operating rate of primary aluminum billets in December was 56.4%, down 0.4% MoM. By region, in the northern aluminum billet-producing provinces of Shandong and Inner Mongolia, operating rates weakened to varying degrees due to declining downstream demand. In December, aluminum billet processing fees in South China remained high. Although some billet plants in Guangxi reduced production due to maintenance at upstream aluminum smelters, other plants maintained strong operating intentions, and aluminum billet operations in Guangxi, Guizhou, Yunnan, and neighboring provinces fluctuated at highs. Meanwhile, as the Guangdong-Shanghai price spread returned to positive territory, coupled with some billet plants rushing to complete annual operating targets, aluminum billet shipments from Xinjiang, Ningxia, and other provinces to South China increased significantly during the month, with production showing a notable MoM increase.

Overall, although downstream demand for aluminum profiles remained stable with a weak trend in December, in January, as downstream manufacturers enter large-scale holiday or pre-holiday phases, a demand pullback will be inevitable, which will impact billet plant operations. SMM expects the production decline of domestic primary aluminum billets in January to be more pronounced.

Data Source: SMM Click on the SMM Industry Database for More Information