Domestic aluminum ingots inventory still failed to drop in July, and the Guangdong-Shanghai price spread first narrowed and then widened

In July, domestic aluminum ingots inventory still failed to drop. As of July 4, 2024, SMM statistics showed the total social inventory of aluminum ingots at 773,000 mt, (the amount for sale stood at 647,000 mt), up 10,000 mt WoW and 4,000 mt from July 1. Since June 20, there has been a continuous accumulation for nearly half a month, with a cumulative slight increase of 17,000 mt. Domestic aluminum ingot inventory is still 248,000 mt higher YoY and 39,000 mt higher than the same period in 2022. In the week of June 24-28, domestic aluminum ingot pick-up from warehouses decreased by 8,900 mt WoW to 105,800 mt. According to the SMM survey, due to the Guangdong-Shanghai price spread once expanding to over 200 yuan/mt, there was frequent transshipment from south China to east China last week. The large spot discounts together with the stimulation of the Guangdong-Shanghai price spread led to a slight improvement in aluminum ingot pick-up from warehouses in south China in the latter part of last week, with stable inventory performance and a temporary tightening of supply, showing signs of a rebound in spot discounts. However, by mid-week, the rebound in aluminum prices led to active market shipments and an increase in supply, making it difficult for the market to hold prices, and spot discounts in south China expanded again. Due to the continuous slow narrowing of spot discounts in east China, the Guangdong-Shanghai price spread first narrowed and then expanded within the week. SMM expects that July inventory will fluctuate between 700,000-800,000 mt.