Due to declining operating rate of aluminum extrusion industry, the continuous destocking of aluminum billets came to an end

The nearly month-long continuous destocking has ended, and domestic aluminum billet inventory returned to a three-year high for the same period. As of July 11, domestic aluminum billet social inventory was 146,700 mt, up 7,000 mt WoW. Except for a slight decrease in Huzhou, all other regions saw varying degrees of restocking. Aluminum billet pick-up from warehouses remained sluggish, down 400 mt WoW to 38,200 mt. Poor downstream operating rate and weak demand during the off-season are the main reasons for the shift to restocking. In mid-July, with a slight increase in supply and weak demand during the off-season, domestic aluminum billet inventory may see a slight increase, but it is expected that aluminum billet inventory in July will remain between 130,000-180,000 mt.

With the narrowing of the Guangdong-Shanghai price spread, the conversion margin spread between south China and east China has also been somewhat corrected. As of July 11, the conversion margins of φ120 billets in Wuxi and Nanchang both rose to 200 yuan/mt, up 40 and 80 yuan/mt WoW, respectively. With the recent rise in conversion margins in south China, billet factories' production and shipment pace have responded accordingly, leading to a slight increase in arrivals in south China. However, the sustainability of destocking and rising conversion margins is somewhat lacking. Currently, the conversion margins of φ120 billets in Foshan slightly decreased to 380 yuan/mt, down 30 yuan/mt WoW. Considering high Guangdong-Shanghai price spread, it is expected that the conversion margins of φ120 billets in south China will remain above 300 yuan/mt within the month.