Aluminium ingot social inventory in China began to fall

On January 11, 2024, SMM data showed that the total social inventory of aluminium ingots in China’s eight major markets was 459,000 mt, and the domestic aluminium inventory available was 333,000 mt, down by 12,000 mt compared with Monday, 3,000 mt WoW, and 183,000 mt YoY, which was still at the low level of the same period in the past seven years. Aluminium ingot inventories began to decrease in the middle of the week, ending the continuous inventory accumulation since the end of December. The current overall domestic spot circulation is still tight. Falling stocks supported the spot market. According to SMM, the decline in aluminium ingot inventories in the middle of the week are primarily determined by two factors: 1. The inventory pressure eased in Gongyi. However, due to another heavy pollution weather warning in Henan, we need to continue to pay attention to the production of downstream enterprises; 2. As aluminium prices fell, downstream producers stepped up their purchases before the holiday, driving outflows from warehouses in the domestic mainstream consumption places to increase. At the same time, as the mid-week arrivals in Foshan were still relatively low, south China also contributed to the destocking.

SMM expects aluminium inventory to build up in January: in the first half of the month, due to the continued closure of the import window and the impact of production reduction in Yunnan on the arrival of aluminium ingots, the inventory accumulation will be mild. We need to pay attention to the recent opening of the import window, as well as the increase in supply in northern regions such as Xinjiang; in the second half of the month, we need to pay attention to downstream CNY break. Curbed by decline in downstream operating rates before CNY and the decline in the aluminium liquid ratio at the supply, domestic aluminium ingot inventories may once again increase. SMM predicts that the total social inventory of domestic aluminium ingots may rise to about 550,000-600,000 mt by the end of January.