Aluminum ingot inventory before and after the CNY holidays in 2024

The inventory of domestic aluminum ingots grew along with the project suspension in the downstream. On January 29, 2024, the total social inventory of aluminum ingots was 467,000 mt, and the amount for sale was 341,000 mt, up by 30,000 mt MoM. The destocking suspended at the end of January. According to SMM statistics, the shipment volume of aluminum ingots last week was 104,400 mt, and the weekly shipment volume decreased by 12,900 mt WoW, reflecting the sharp drop in demand for aluminum ingots after the shutdown in the downstream. At the end of January, the inventory of domestic aluminum ingots increased significantly, and the shift in fundamentals also exerted greater pressure on the recent futures market.

The current total domestic inventory continues to remain at a low level for the same period in the past seven years, down by 467,000 mt YoY, and the inventory in the same period last year was twice as much as this year. We focus on the weekly inventory changes before and after the CNY holidays in the past six years. Comparing the inventory in the second week before the CNY holidays, the inventory in 2024 is still the lowest, but the inventory growth and magnitude increased. It’s necessary to pay close attention to changes in the inventory accumulation before and after the CNY holidays.

Inventories in Wuxi increased by 5,000 mt WoW to 121,000 mt, and outflows dropped slightly by 1,400 mt WoW to 47,500 mt. It is worth noting that Wuxi has been experiencing accumulation growth on weekends for one and a half consecutive months, reflecting the concentration of goods arriving in Wuxi on weekends. Inventory increased by 1,300 mt WoW, while outflow dropped by 4,000 mt. As the CNY holiday approaches, there is a trend of oversupply. However, as the current inventory is still not high, and the recent changes have been relatively stable, the premium of aluminum ingots in Wuxi narrowed. SMM expects that stocks in Wuxi will continue to increase steadily and slightly in the future.

Inventories in Shanghai remained stable, flat WoW at 41,000 mt. On January 26, SMM statistics showed that the aluminum inventory in the Shanghai Free Trade Zone was 13,600 mt, and the inventory in the Guangdong Free Trade Zone was 3,600 mt, with a total inventory of 17,200 mt, down by 5,100 mt WoW. SMM believes that although the import window has been closed recently and the inventory in the bonded area is still low, the inventory in the Shanghai Bonded Area dropped significantly last week, and it is still necessary to pay attention to the interference of imported supply on the domestic social inventory of aluminum ingots, especially in east China.

Inventory accumulation continued in Gongyi. On Monday, the aluminum ingot inventory in Gongyi was 77,000 mt, up 5,000 mt WoW. The outflows last week dropped slightly by 1,600 mt WoW to 31,500 mt. Due to the weakening demand as the CNY holidays approaches, coupled with the mid-week macro-driven increase in aluminum prices and the re-emergence of heavy pollution weather warnings in Henan, the production of some downstream companies has been hindered. At the same time, the decrease in pre-holiday orders dragged down the purchasing and inventory.

There was a significant accumulation of 20,000 mt in Foshan to 129,000 mt, while the outflows dropped sharply by 8,000 mt to 16,700 mt. There was an obvious oversupply in south China. Last weekend, Foshan's outflows dropped by 5,800 mt, while arrivals surged by 13,700 mt. The downstream demand for goods during the holidays dropped sharply, and the supply of goods in the oversupplied market tended to become looser. In south China, due to the intensive arrival of goods over the weekend, inventory increased rapidly, setting the tone for the rapid collapse of market premiums in south China at the end of the month. The price gap between Guangdong and Shanghai is expected to quickly narrow to zero. SMM predicts that in the first two weeks before the holiday, the spot premiums in south China may turn to discounts. Along with the downstream holiday, the market’s pre-holiday replenishment demand will gradually decrease, and the spot will tend to be sluggish. We need to pay attention to the rapid decline in premiums in the short term and the risk of price difference inversion between east and south China.

The aluminum billets inventory was affected earlier by the downstream pre-holiday shutdown, which has lasted for nearly half a month. The domestic social inventory of aluminum billets on January 29 was 127,700 mt, up by 17,000 mt WoW. The domestic aluminum billets inventory is no longer at the low level of the same period in the past four years. Last week, the domestic aluminum billets outflow was 28,500 mt, and the weekly outflows continued to decrease by 2,600 mt. As the Spring Festival approaches, inventory has accumulated significantly, mainly because downstream extrusion factories gradually reduced production, and some small and medium-sized enterprises have stopped production, driving demand to decline rapidly. At the same time, comparing the inventory in the second week before the CNY holidays, the current domestic aluminum billets inventory increased by 32,700 mt YoY, and the inventory is under pressure. Among them, Foshan has accumulated 13,500 mt, and the weekend arrival volume increased by about 50%, a substantial increase of 4,400 mt, while the outflows continued to decrease by 1,700 mt; Wuxi has accumulated 3,400 mt, and the outflows dropped 0.03 million mt last week; aluminum billets inventories in Changzhou, Huzhou and Nanchang have not changed much.

SMM predicts that as CNY holiday is drawing near, the amount of ingot casting in the northwest and southwest China will increase slightly. SMM preliminary estimates indicate that the current domestic daily aluminum ingot production is 35,000 mt/day. The daily output of aluminum ingots during the holidays may reach 40,000 mt/day, but the amount of ingots cast is still down YoY. Under this circumstance, coupled with the recent tightness of railway shipping capacity in Xinjiang, the total inventory accumulated during the Spring Festival in 2024 may be difficult to exceed the level of the same period last year. Before and after the CNY holiday, domestic aluminum ingots will enter a continuous accumulation stage. The total social inventory of domestic aluminum ingots on the last day before the holiday in February may accumulate to about 550,000-600,000 tons. , the inventory may accumulate to about 750,000-800,000 mt on the first day after the holiday, and the inventory high point after the holiday will be around 900,000-950,000 mt. We need to pay attention to inflows of imported ingots, shipment from Xinjiang and downstream holidays before CNY.