Aluminum Billet Inventory Exceeds 3.1 Million mt, Processing Fees Under Pressure with Declines in Three Regions [SMM Analysis]

SMM, February 20:

According to the latest data from SMM, as of February 20, 2025, domestic aluminum billet social inventory reached 315,300 mt, an increase of 8,300 mt WoW and 91,700 mt compared to pre-holiday levels (January 27). Inventory continued to climb after surpassing the 300,000 mt threshold. Regarding aluminum billet outflows from warehouses, the second week after the holiday recorded outflows of 44,200 mt, an increase of 27,100 mt compared to the first week after the holiday, returning to normal pre-holiday levels. This indicates a recovery in post-holiday end-user restocking demand. Based on the inventory evolution pattern observed over the past seven years after the Chinese New Year, SMM estimates that the destocking turning point for aluminum billets is likely to appear earlier than that for aluminum ingots. The inventory turning point is expected to emerge in late February, with Q1 inventory peaks potentially reaching around 350,000 mt. As the traditional peak season of "Golden March and Silver April" approaches, coupled with the continuous recovery of downstream operating rates, the market is closely monitoring the actual impact of consumption recovery on the destocking process.

Regarding aluminum billet processing fees, driven by domestic and international macro sentiment, SHFE aluminum performed strongly this week, with futures aluminum prices continuously rising. During this period, suppliers frequently lowered prices, putting pressure on aluminum billet processing fees. Downstream buying sentiment was weak this week. Although the second week after the holiday showed good outflow data, the rapid upward shift in aluminum price centers led to a cautious sentiment among profile enterprises, which mainly purchased on a need-only basis, resulting in weak aluminum billet transactions during the week. By region, transactions in the Foshan market were slow, with Foshan aluminum billet prices quoted at 120-170 yuan/mt, down 40 yuan/mt compared to last Thursday. In east China, profile enterprises have mostly resumed operations, but downstream demand has yet to improve. Wuxi aluminum billet prices were quoted at 130-180 yuan/mt, down 50 yuan/mt compared to last Thursday. In Nanchang, price suppression dominated purchases, with Nanchang market prices quoted at 90-140 yuan/mt, down 80 yuan/mt compared to last Thursday.

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