Since after the National Day holiday, domestic aluminum ingot inventory has performed remarkably well. As of October 21, 2024, SMM statistics show that the domestic aluminum ingot social inventory stands at 638,000 mt, with a domestic circulating aluminum inventory of 512,000 mt, continuing to decrease by 10,000 mt from last Thursday. Since the holiday, a total of 46,000 mt has been destocked. On YoY terms, the domestic aluminum ingot inventory is only 12,000 mt higher than the post-holiday historical level of 626,000 mt last year, and this data continues to narrow. SMM believes that if the domestic aluminum ingot inventory continues to decline in late October, it is expected to return to the lowest point in nearly five years. Regarding outflows from warehouses, last week's outflows increased by 22,400 mt WoW to 114,800 mt, and post-holiday aluminum ingot outflows have also continued to recover. During the traditional "September-October peak season," the domestic aluminum ingot inventory's better-than-expected performance has continued, providing good support for post-holiday aluminum prices.
Regarding the insufficient transportation capacity in Xinjiang, according to the latest feedback from some warehouses, the overall shipment from Xinjiang has begun to gradually return to normal, and the backlog situation has eased. Due to the strong spot prices in Gongyi, road transportation to Gongyi has started in the latter part of last week. With the arrivals over the weekend, the inventory in Gongyi remained stable at 52,000 mt and did not continue to decline. Since mid-last week, Gongyi's inventory has shown a trend of slight increase. Additionally, this week, Xinjiang's railway transportation has also shown signs of gradual easing and recovery, with a significant increase in the number of goods in transit. Since it takes about seven days for the goods in transit to arrive, it is expected that the arrivals in Gongyi and east China will see a significant increase by the end of October. The demand in Wuxi is currently performing well, with strong outflows leading to a decrease of 12,000 mt WoW from last Thursday, making it the best-performing region among the three. Although the spot prices in Foshan are not performing well, the supply has been sufficient since October due to the reduction in aluminum billet production and a slight increase in casting ingot production in neighboring provinces. This week, the arrivals reached 13,600 mt, more than doubling WoW. SMM will closely monitor the latest developments in the transportation of aluminum products from Xinjiang and the adjustment of the proportion of liquid aluminum on the supply side.
Regarding aluminum billet inventory, according to SMM statistics, as of October 21, the domestic aluminum billet social inventory was 117,800 mt, with a decrease of 8,500 mt from last Thursday. With the transportation capacity issues in north-west China not showing significant improvement in October, and the expectation of a slight reduction in domestic aluminum billet supply, coupled with the stabilization of downstream extrusion operating rates during the week, aluminum billet inventory has shown a significant decline over the past week. Regarding outflows from warehouses, last week's outflows increased by 7,900 mt WoW to 46,900 mt, and post-holiday aluminum billet outflows have also continued to recover. Therefore, the inventory buildup of domestic aluminum billets during the National Day holiday has been partially consumed, currently increasing by 8,800 mt compared to pre-holiday levels, and only 2,900 mt higher than the same period last year at 114,900 mt. Although it remains at a high level for the same period in the past three years, the YoY gap has shown signs of narrowing. SMM expects that with the easing of domestic aluminum billet inventory pressure in the second half of October, domestic aluminum billet inventory is likely to remain largely stable within the range of 100,000-150,000 mt during the month. However, caution is needed regarding the risk of inventory buildup due to increased arrivals. Whether the inventory rhythm will change in the future still requires close attention to downstream consumption under high aluminum prices and the smoothness of shipments from major supply sources.
Overall, the domestic aluminum market supply side has slightly increased, with reduced expectations for production cuts in Yunnan, and the proportion of liquid aluminum is expected to adjust as October enters the end of the peak season. Demand side, during the holiday, most large and medium-sized downstream processing enterprises maintained normal operations, and the weekly operating rate of the downstream aluminum processing industry in late October remained largely stable. Additionally, the demand in sectors such as new energy and photovoltaics continued to perform well, boosting future aluminum market consumption expectations. In the short term, with a favorable macro front and stable fundamentals, the better-than-expected post-holiday inventory performance is expected to drive the aluminum futures and spot market to continue strengthening. However, close attention is needed to changes in the volume of goods in transit and the dynamic adjustment of casting ingot production. According to SMM survey analysis, the volume of goods in transit is expected to gradually increase post-holiday, but the short-term inventory buildup of aluminum ingots has already ended. It is expected that once transportation returns to normal, aluminum social inventory may see an increase, but the pressure in the near term is limited. Looking at the entire month, under the traditional "October peak season" background, domestic aluminum ingot inventory is still expected to maintain a downward trend. SMM expects that in the second half of October, domestic aluminum ingot inventory will operate around 600,000-700,000 mt, and in an optimistic scenario, domestic aluminum ingot inventory is expected to decrease to around 600,000 mt by the end of October. Whether the inventory rhythm will change in the future still requires close attention to downstream consumption under high aluminum prices and the smoothness of shipments from major supply sources.
