Weak consumption keeps processing fees for aluminium billet at lows in two weeks after holidays

SHANGHAI, Feb 25 (SMM) – In the two weeks after the Lunar New Year holiday, processing fees for aluminium billet across the eastern and southern markets in China held steady at lows as downstream consumers had yet to return from holidays.

Most manufacturers of aluminium structures did not resume production until the middle of the first lunar month. This weighed on demand for aluminium billet and lowered processing fees.

High inventories also weighed on aluminium billet processing fees. SMM data showed that inventories of aluminium billet across Shandong, Wuxi, Changzhou, Huzhou and Nanchang hit a nearly two-year high of 169,300 mt on February 14.

Processing fees for aluminium billet in major regions rose in March-May 2018 as consumption recovered.

SMM learned that some manufacturers of aluminium structures are optimistic about consumption in March-May. The pick-up in the housing market and construction sector is likely to boost aluminium billet consumption and lower inventories, pushing processing fees higher.

Processing fees for aluminium billet showed signs of growth later last week, indicating a recovery in downstream consumption.