Inventory Buildup of Aluminum Billets Combined with Insufficient Rigid Demand Causes Aluminum Billet Processing Fees to Decline Steadily [SMM Aluminum Billet Weekly Review]

SMM, January 9:

Supply side, according to SMM statistics, the total production of primary aluminum billets in China in December 2024 (31 days) was 1.465 million mt, down 12,000 mt MoM from November 2024 (30 days), a decrease of 0.81%; up 162,000 mt YoY, an increase of 12.4%. The domestic operating rate of primary aluminum billets in December was 56.4%, down 0.4% MoM. Entering early January, as no further production cuts have been reported on the domestic aluminum billet supply side, arrivals remained ample. According to SMM statistics, as of January 9, domestic social inventory of aluminum billets stood at 137,000 mt, with a slight inventory buildup of 2,900 mt mid-week. On a YoY basis, the gap compared to the same period last year widened further to 54,000 mt. Outflows from warehouses, last week's aluminum billet outflows from warehouses decreased by 6,600 mt WoW to 35,100 mt.

Processing fees, this week, spot aluminum ingot prices fluctuated rangebound. As downstream holiday schedules have been largely confirmed, the weakening demand trend became evident, and the market showed a volume discount trend, putting pressure on aluminum billet processing fees. By region, Foshan's aluminum billet shipments performed moderately this week. However, as downstream holidays approached, suppliers lowered prices to accelerate transactions. Today's processing fee for φ120 aluminum billets was 100 yuan/mt lower than last Thursday, at 350 yuan/mt. In Wuxi, the purchasing side remained mostly on the sidelines, with insufficient downstream demand, and market transactions were moderate. Today's processing fee for φ120 aluminum billets was 350 yuan/mt, down 30 yuan/mt from last Thursday. In Nanchang, the tight supply situation slightly eased, and suppliers intended to stand firm on quotes, but downstream acceptance was low. Processing fees jumped initially and then pulled back, with φ120 aluminum billet processing fees at 370 yuan/mt, down 30 yuan/mt from last Thursday.

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