SMM August 21 ：
According to SMM statistics, as of August 20, aluminum billet inventory in China's major consumption areas recorded 143,000 mt, with an inventory buildup of 500 mt from last Monday and 6,000 mt from last Thursday, maintaining a continuous buildup pace. Compared with the same period, total inventory has risen to the highest for the same period in the past five years. From the perspective of warehouse withdrawals, aluminum billet warehouse withdrawals from August 10 to August 17 recorded 30,300 mt, up 2,800 mt WoW. Market transaction activity improved slightly but remained at a low level for the year. The current continuous inventory buildup of aluminum billet is mainly driven by both supply and demand sides: on the one hand, consumption has entered the traditional off-season, with downstream procurement still mainly based on rigid demand, making it difficult to absorb the continuous growth on the supply side; on the other hand, previous high processing fees drove the continuous recovery of operating rates at aluminum billet plants, with supply-side pressure continuing to emerge. Specifically, inventory in Foshan remained at a periodic high of 66,000 mt, in Wuxi at 26,500 mt, and Huzhou and Nanchang continued to see slight inventory buildup. Comparing with the trend for the same period over the past three years, the historical average for week 34 was about 115,000 mt, with current inventory significantly above the average, continuing the oversupply pattern. Given that the supply-demand situation is difficult to reverse fundamentally, aluminum billet inventory is expected to maintain a buildup trend next week, and attention should be paid to the recovery of off-season consumption downstream and changes in operating rates at aluminum billet plants.
During the week, the center of aluminum prices pulled back rapidly. SMM A00 spot aluminum prices fell from 24,120 yuan/mt last Thursday to 23,600 yuan/mt, with a cumulative decline of about 520 yuan/mt. Against the backdrop of significant decline in aluminum prices, aluminum billet processing fees in various regions generally showed a trend of holding prices firm and rising. By region, in Foshan, φ90 aluminum billet processing fee was reported at 310 yuan/mt, φ120 at 260 yuan/mt, up 150 yuan/mt each from last Thursday; in Wuxi, φ90 aluminum billet was reported at 560 yuan/mt, φ120 at 500 yuan/mt, up 140/200 yuan/mt respectively from last Thursday; in Nanchang, φ90 aluminum billet was reported at 450 yuan/mt, φ120 at 400 yuan/mt, up 250 yuan/mt each from last Thursday. The significant price firming of processing fees during the week was mainly driven by two factors: first, the rapid pullback in aluminum prices led to strong willingness among plants to hold prices firm based on earlier high-cost raw material inventory; second, under continuous delivery pressure on the supply side, processing fees were forced to raise to maintain reasonable shipment profits. It is worth noting that the magnitude of processing fee increase was significantly higher than the decline in aluminum prices, reflecting that current suppliers have relatively weak bargaining power, but downstream acceptance of high processing fees remains to be seen; the sustainability of the processing fee trend depends on whether aluminum prices can stabilize and the strength of actual downstream demand absorption. Subsequently, attention should be paid to delivery situations by region and changes in downstream operating rates.
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