SMM Aluminium Ingot and Billet Social Inventories as of January 5

SHANGHAI, Jan 5 (SMM) - Aluminium ingot: The aluminium ingot social inventories across China’s eight major markets stood at 576,000 mt as of January 5, up 83,000 mt from a week ago and 15,000 mt from January 3, the first trading day after the New Year’s Day. The figure was 200,000 mt lower than the same period last year, though. The social inventories have entered a seasonal accumulation cycle, but were still near a historical low, even after the drastic increase. Wuxi led the overall growth due to enormous arrivals, with a weekly increase of 35,000 mt, followed by Gongyi (+24,000 mt). The inventory in Nanhai began to build up following continuous drop, with a weekly increase of 11,000 mt. Transactions in the spot market became muted since most of the downstream producers are planning to be closed around January 10 for the upcoming Chinese New Year. As smelters ramped up their aluminium ingot production in December, the supply shock began to emerge in the spot market in early January. Therefore, the social inventories are expected to maintain the upward trend over the next couple of weeks.

Aluminium billet: The domestic aluminium billet social inventory extended the increase this week and stood at 79,700 mt as of January 5, up 18,800 mt from a week ago. Most regions witnessed inventory accumulation, led by Foshan, with the local inventory adding 9,100 mt to 34,500 mt. This was followed by east China’s Huzhou (+5,000 mt) and Wuxi (+3,800 mt). Previously, the conversion margins in east China were buoyed by relatively strong demand, attracting cargoes from other regions. As a result, the inventory in Wuxi rose for several weeks. After the price difference between east and south China returned to normal and following the rise of conversion margins in Foshan, more cargoes began to flow into this region, driving up the local inventory. Even though the aluminium billet production cuts are estimated to expand in January, its supply will remain abundant as the production of aluminium extruders also fell noticeably amid insufficient orders. Therefore, aluminium billet social inventories in both east and south China are expected to climb further. And the inventories of billet plants and downstream enterprises will also gradually pile up.