October domestic primary aluminum billet production dropped back slightly [SMM Analysis]

SMM, Nov 13: October domestic primary aluminum billet production dropped back slightly. The "October peak season" marks both the beginning of the fourth quarter and a significant turning point for the year-end domestic aluminum billet consumption market. Many aluminum billet manufacturers adjusted their production pace during this period to cope with high aluminum prices, sluggish processing fees, and weakening downstream demand, among other unfavourable factors. In October, primary aluminum billet demand and operating performance showed slight signs of decline. Despite having one more operating day in October compared to September, overall domestic primary aluminum billet supply still saw a certain reduction, with daily average production down 2,000 mt MoM to around 49,000 mt/day.

According to SMM's latest monthly survey data, the number of enterprises in the SMM primary aluminum billet monthly survey sample currently totals 169, with a total capacity of 31.205 million mt, unchanged from the previous month. In October 2024 (31 days), the national total production of primary aluminum billets was 1.507 million mt, down 21,000 mt MoM from September 2024 (30 days), a decrease of 1.37%; YoY, it increased by 177,000 mt, an increase of 13.6%. The domestic operating rate of primary aluminum billets in September was 58.0%, down 0.8% MoM.

Regionally, during the transition phase between the year-end off-season and peak season, major aluminum billet producers in Shandong and Inner Mongolia adjusted their production strategies due to declining downstream demand and poor overall efficiency, with some manufacturers significantly reducing production. In Guangxi, previously completed aluminum plants officially started production, but their relatively small scale had a limited impact on overall supply. In Xinjiang, several aluminum billet enterprises slowed down their production pace to alleviate financial and inventory pressure due to transportation disruptions and product backlogs since October. Other regions saw no significant changes.

Overall, as November gradually transitions to the year-end off-season, coupled with continuously rising aluminum prices, end-use sector sentiment of cautious procurement may intensify, posing more severe challenges to domestic aluminum billet operating rates and demand. SMM expects that domestic primary aluminum billet production will see a relatively significant decline in November.