Regarding aluminum billet inventory, the National Day holiday saw significant accumulation, higher than that of aluminum ingots, making it relatively high for H2 2023. As per SMM, as of October 12, 2023, China's aluminum billet social inventory was 112,800 mt, down 500 mt from October 9 but up 43,200 mt from pre-holiday. The inventory now exceeds the same period last year and nears the three-year high. The post-holiday inventory increase mainly comes from Foshan and Huzhou, with no improvement in downstream extrusion demand, resulting in significant inventory pressure.
In terms of supply, the proportion of maolten aluminum in smelters’ total production has been persistently high this year, with a slight decline in September. China‘s aluminum billet production slightly decreased, with varying production declines in regions including Guangxi and Guizhou in the south, Shaanxi, Gansu, and Ningxia in the northwest, and Inner Mongolia, Shandong, and Shanxi in North China. Despite this, there’s been an uptick in aluminum billet inventory since last month, notwithstanding a short-term decline at month-end due to some downstream stockpiling pre-holiday. However, during the holiday period, domestic aluminum billet supply essentially maintained high production levels, with social aluminum billet inventory increasing by about 5,000 mt daily.
In terms of demand, during this year's National Day holiday, extrusion companies took longer vacations YoY, and raw material stockpiling was less than usual. Purchases were mainly need-based. The lower volume of orders and operating rates led companies to extend holidays. During the National Day holiday, downstream purchasing volume was significantly lower. According to SMM statistics, the withdrawal of aluminum billet from social warehouses in the last two weeks dropped over 30% YoY. Consequently, an increasing proportion of aluminum billets were transported to social warehouses at consumption areas or accumulated in billet plants’ warehouses.
