Aluminum billet arrivals in east China increase, but consumption is insufficient, putting pressure on processing fees [SMM Weekly Review of Aluminum Billets]

SMM News on May 29:

In terms of aluminum billet inventory, according to SMM statistics, as of May 29, the aluminum billet inventory in major domestic consumption areas reached 1.283 million mt, a decrease of 19,000 mt from this Monday and a decline of 25,000 mt compared to inventory levels last Thursday. Despite signs of a slowdown in aluminum billet destocking, the overall inventory still hovered around 1.3 million mt, remaining at a low level compared to the same period in the past three years, indicating a continued low inventory level. From the perspective of outflows from warehouses data, domestic aluminum billet outflows from warehouses totaled 446,000 mt during the period from May 20 to May 25, a decrease of 49,000 mt WoW and a decline of 73,000 mt YoY. Affected by the continuous impact of truck shipments, shipments showed little improvement, indicating a significant weakening in the trading activity of the aluminum billet market and a growing off-season atmosphere. From a regional perspective, there was a gradual increasing trend in aluminum billet arrivals in the Wuxi area, as downstream consumption weakened, leading manufacturers to increase shipments to warehouses. Meanwhile, the current Guangdong-Shanghai price spread has widened to 150 yuan/mt, and the price difference of "strong in the east, weak in the south" may promote the flow of aluminum billets between regions. It is necessary to continue to monitor the pace of changes in domestic consumption and the fluctuations in the Guangdong-Shanghai price spread.

In the past week, trading in the SHFE aluminum market has returned to fundamental logic, with market consumption shifting from peak season to off-season. However, due to the limited arrivals in social inventory and continuous destocking, aluminum prices maintained a range-bound fluctuation during the week, with limited declines in spot prices. Aluminum billets, on the other hand, have been under significant pressure on processing fees due to weakened downstream purchasing, with processing fees for aluminum billets in three regions showing mixed changes. As of May 29, 2025, the aluminum billet market in the Foshan area reported processing fees of 290/340 yuan/mt, an increase of 10 yuan/mt WoW; the Wuxi area reported processing fees of 250/330 yuan/mt, a decrease of 50/20 yuan/mt; and the Nanchang area reported processing fees of 270/320 yuan/mt, an increase of 20 yuan/mt. (Unit: yuan/mt)

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