Driven by downstream pre-holiday stocking and low ingot output, aluminium ingot inventories continued to fall

On January 25, 2024, SMM data showed that the social inventory of aluminum ingots in China’s eight major markets was 437,000 mt, and the amount for sale stood at 311,000 mt, down by 4,000 mt WoW, and down by 307,000 mt YoY, which was a 7-year low. As the shipment of aluminum ingots were somehow affected by earthquake and lack of transportation capacity in Xinjiang, the arrival did not rise significantly. The destocking of domestic aluminum ingots has continued for nearly two weeks. Goingyi saw obvious inventory accumulation in the week, while inventories kept falling in east and south China. The supply in the spot market continued to tighten, and the inventory accumulation will be mild. The destocking accelerated at the end of 2023. Domestic aluminum ingot inventory has hit new lows for two consecutive weeks before New Year's Day. As CNY holidays is drawing near, the amount of aluminium ingot casting during the holidays will increase slightly in the northwest and southwest China. According to preliminary estimates by SMM, the current domestic aluminum ingot production is 35,000 mt/day, which may reach 40,000 mt/day during holidays. In the context of the year-on-year decrease in ingot output and tightening railway shipping capacity in Xinjiang, the total inventory may be difficult to exceed level in the same period of 2023. SMM sees aluminum ingot social inventories at around 450,000-500,000 mt at the end of January. We need to pay attention to inflows of imported ingots, shipment from Xinjiang and downstream holidays before CNY.