Aluminum Billet Inventory Entered a Phase of Rapid Decline, Regional Processing Fees Rebounded to 300 yuan/mt [SMM Aluminum Billet Weekly Review]

SMM News, March 26:

According to SMM statistics, as of March 26, aluminum billet inventory in China’s major consumption hubs totaled 341,500 mt, down 28,000 mt from last Thursday, with the destocking trend steadily accelerating. On warehouse withdrawals, aluminum billet warehouse withdrawals totaled 69,800 mt in the single week from March 17 to March 23, up 8,200 mt from the previous week. Combined with the inventory decline trend, this week’s aluminum billet warehouse withdrawals were expected to exceed 70,000 mt, indicating consumption had returned to the pace of the peak season. Aluminum billet inventory accelerated destocking this week, mainly due to the sharp and rapid drop in aluminum prices, coupled with limited earlier stockpiling by extrusion plants amid fear of high prices. Against the backdrop of restocking and recovering rigid demand, aluminum billet social inventory posted nearly 30,000 mt of destocking in a single week. The inventory downtrend has entered a phase of rapid destocking. Based on recent consumption conditions and seasonal patterns, aluminum billet inventory was expected to return to the 250,000-280,000 mt range by the end of April.

During the week, uncertainty surrounding geopolitical conflicts continued, and market speculative sentiment faded. Aluminum prices showed a sideways recovery trend, but due to the sharp drop in aluminum prices, and considering the impact of absolute transaction prices, aluminum billet processing fees remained strong. By region, processing fees in Foshan were quoted at 290/340, up 260 yuan/mt WoW; Wuxi was quoted at 350/400 yuan/mt, up 250 yuan/mt WoW; and Nanchang was quoted at 470/520 yuan/mt, up 320 yuan/mt WoW. By region, in Nanchang, declining current inventory led suppliers to hold prices firm; in Wuxi, top-tier enterprises suspended quotations, with circulation mainly driven by traders, but ample earlier stockpiling by traders limited the upside in processing fees; in Foshan, sales volume remained the priority, and suppliers took the opportunity to recover funds. During the week, aluminum billet processing fees in all regions rebounded above 300, mainly due to the sharp drop in aluminum prices. The price spread versus the monthly average aluminum price hovered around 800 yuan/mt, resulting in a notable repair in processing fees. Current aluminum billet inventory remained at a high level, and supply-side pressure had not fully eased, but current aluminum billet processing fees were closely tied to the cost relationship with weekly and monthly average aluminum prices. Aluminum billet processing fees were expected to continue to hold up well, though upside room remained relatively limited.