Aluminum Stocks in China Major Markets Fall for Two Weeks in A Row, SMM Reports

Expectations for the September peak season diverged from the sluggish reality. With aluminum prices remaining high, downstream processing enterprises in central China continued to procure only small volumes as needed, stockpiling cautiously and focusing on reducing in-factory inventory. Only trading firms engaging in both spot and futures market made large purchases, while major suppliers showed limited willingness to sell due to the deep discount. Ultimately, actual transaction prices in the central China market ranged from a discount of 150-180 yuan/mt against the 09 contract.

[SMM Aluminum Alloy Flash] China's social inventory of cast aluminum alloy ingots recorded 34,100 mt this week, up 1,100 mt WoW, marking the fifth consecutive week of inventory buildup. The traditional peak consumption season is gradually kicking off, but end-use demand improvement remains limited, with downstream purchases still mainly need-based and inventory digestion relatively slow. Meanwhile, purchases by some futures and spot traders and trade links continue to provide some support to social inventory. In the short term, as demand from the September peak season is gradually released, the pace of social inventory buildup may narrow, but the inventory inflection point still awaits further demand realization.

[Low inventory supports aluminum prices to consolidate at highs; peak-season recovery pace awaits verification] Overall, aluminum prices are expected to consolidate on a strong note in the short term.