Aluminum: Inventory has approached 800,000 mt, and the spot market in Guangdong and Shanghai has changed

At the beginning of July, domestic aluminum ingot inventory was disappointing, currently at a three-year high for the same period. Since June 20, domestic aluminum ingot social inventory has been accumulating for over half a month, increasing by 35,000 mt. The weak inventory performance has pushed domestic aluminum ingot inventory close to the 800,000 mt, significantly suppressing both futures and spot aluminum prices. Although aluminum ingot inventory slightly decreased by 2,000 mt mid-week, as of July 8, 2024, SMM reported a total social inventory of 789,000 mt, (the amount for sale stood at 663,000 mt), up 16,000 mt WoW, and up 236,000 mt YoY. In the week ending July 7, domestic aluminum ingot pick-up from warehouses increased slightly by 4,400 mt WoW to 110,200 mt. SMM believes that the slight increase in pick-up from warehouses but continuous accumulation of inventory was mainly due to concentrated arrivals of aluminum ingots since July. On the supply side, there has been a noticeable increase in domestic ingot production over the past two months. Concentrated shipments from northern aluminum smelters led to concentrated arrivals in the Wuxi over the weekend, up by 17,000 mt to 285,000 mt, surpassing south China's 262,000 mt by over 20,000 mt. This is expected to significantly impact the Guangdong-Shanghai price spread in the short term, which has currently narrowed to -140 yuan/mt. The potential for a decline in domestic aluminum ingot inventory remains limited.