According to the latest data from SMM, the inventory of aluminum ingots on the first day after CNY in 2024 was 640,000 mt, down 31.7% YoY. The total inventory of aluminum ingots and aluminum billets was 901,000 mt, down 18.4% YoY. The overall inventory was the lowest level in the same period in the past six years. SMM predicts that low inventories and weak inventory accumulation will continue to provide certain support for aluminum price after the holiday.
On February 18, 2024, the total social inventory of aluminum ingots was 640,000 mt, (the amount for sale was 514,000 mt), up 149,000 mt WoW and 16,000 mt compared with February 12. The inventory was better than expected before CNY holiday and remained at the lowest level for the same period in the past seven years. During the CNY in the past six years, the increase of 149,000 mt of domestic aluminum ingots this year has been at a low level. The increase of more than 30% during the holidays seems to be too much. However, in early 2024, it is not surprising to see this extent of growth amid low inventory and weak inventory accumulation.
In terms of regions, Wuxi saw the largest inventory accumulation among the three places. The accumulated inventory of 70,000 mt even exceeded the combined accumulated inventory in Foshan and Gongyi areas. The extent of inventory growth is nearly 60%. This is consistent with the price difference between Shanghai and Guangdong, which was close to zero before the holiday. According to SMM research, goods arriving during the CNY mainly come from the northwest region, including Xinjiang, Qinghai, Ningxia, Shaanxi and other provinces. The Gongyi area has an accumulated inventory of 38,000 mt, up 50%, mainly contributed by aluminum ingots shipped from the northwest region, especially from Xinjiang. The inventory accumulation in south China is 28,000 mt, and the inventory growth is only 18.8%. Due to insufficient price differences, it is basically difficult to see the supply of goods from the north before and after CNY. Moreover, it continues to be affected by the production reduction in Yunnan, and there are not many arrivals in the southwest China, resulting in less inventory accumulation in south China this year.
According to SMM statistics, the domestic social inventory of aluminum billets on February 18 was 259,500 mt, up 61,500 mt WoW, basically in line with previous expectations. In terms of the inventory changes during the CNY in the past six years, the increase of 62,000 mt of domestic aluminum billets this year ranks first, and the growth rate of 30.9% is also at a high level in recent years. SMM predicts that domestic aluminum billets inventory pressure will remain severe after the holiday. Against the background of high aluminum billets production this year, it may be just a matter of time before aluminum billets inventory exceeds the 300,000-mt mark. The post-holiday inventory peak is expected to be 300,000-350,000 mt.
SMM previously predicted that the total inventory accumulation during the CNY in 2024 may be difficult to exceed the level of the same period last year, and is expected to be around 150,000-200,000 mt (the actual value is 149,000 mt). The inventory may reach 650,000-700,000 mt on the first day after the holiday (the actual value is 640,000 mt). The inventory accumulation during the CNY is basically in line with expectation and slightly better than previous expectations, supporting aluminum prices after the holiday. Against this background, SMM predicts that domestic aluminum ingot inventories growth will remain weak in February. The peak of aluminum ingot inventories after the holidays may be around 800,000-850,000 mt. We need to pay close attention to the recovery of domestic consumption after the holidays.
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