In July, there was almost no increase in domestic primary aluminum billet supply! The north-south disparity remains quite evident [SMM Analysis]

SMM, August 19: Due to weak demand during the off-season, the domestic primary aluminum billet output in July saw almost no increase. Considering the additional operating day in July, the average daily output of primary aluminum billets actually decreased by 1,000 mt to around 46,000 mt/day. The supply pressure of aluminum billets has not increased, providing reasonable support for the continued destocking, strong processing fees, and high casting ingot volume in July. According to the latest monthly survey data from SMM, the number of sample enterprises in the SMM primary aluminum billet monthly survey remains at 168, unchanged from the previous month; the total production capacity is 30.955 million mt, an increase of 50,000 mt from the previous month. In July 2024 (31 days), the total national primary aluminum billet production was 1.427 million mt, an increase of 3,000 mt MoM from June 2024 (30 days), a growth rate of 0.2%; YoY, it increased by 106,000 mt, a growth rate of 10.6%. The domestic operating rate of primary aluminum billets in July was 55.3%, unchanged from the previous month.

The north-south disparity in the domestic primary aluminum billet supply in July remains quite evident. Due to the recovery of the Guangdong-Shanghai price spread, the processing fees for aluminum billets in east China also recovered in July. Although the processing fee differences among the three regions were not significant, some aluminum billet manufacturers in north China still reduced or halted production due to maintenance and technical upgrades. The wave of production cuts and halts in north China since June has not completely subsided. Except for slight increases in Shandong, Inner Mongolia, and Gansu, significant reductions were observed in Xinjiang, Qinghai, Ningxia, and Henan. Meanwhile, the resumption of production in Guangxi and Guizhou in south-west China was basically completed in July.

Overall, entering August, with the traditional peak season of "September-October" approaching, downstream demand has slightly improved. It is expected that there is room for resumption of production in north-west China, including Xinjiang and Qinghai. Subsequently, the domestic operating rate of primary aluminum billets is expected to rise, and SMM predicts that aluminum billet production in August will continue to increase.