In the last week before CNY, although domestic aluminum ingot inventories grew further due to the widespread rain and snow weather across the country, the arrival of aluminum ingots was not smooth, and the extent of inventory accumulation was lower than previously expected. On February 5, 2024, SMM data showed that the total social inventory of aluminum ingots was 475,000 mt, (the amount for sale was 349,000 mt), up 3,000 mt WoW, but down 215,000 mt YoY, firmly staying at a low level for the same period in the past seven years. In terms of outflows from warehouses, according to SMM statistics, aluminium ingot outflows from warehouses last week was 85,500 mt, and the weekly volume decreased by 18,900 mt WoW, reflecting the further decline in demand for aluminum ingots after the downstream basically entered CNY holiday in early February.

In terms of regions, east China, including Wuxi, Shanghai, Hangzhou and other places, only accumulated 1,000 mt of inventory compared with last Thursday. The extent of the accumulation is not obvious, mainly because the local pre-holiday outflows remain relatively strong. The volume in Wuxi last week only dropped by 0.38 million mt WoW. Local traders and downstream traders were still in a good mood to stock up before CNY holiday. In South China, the warehouse accumulation was 5,000 mt. The overall performance of the warehouse accumulation was controllable, and the outflow from warehouses fell by 7,400 mt, and the reduction in inflow is even more obvious. Recently, Guangzhou Bureau’s in-transit cargo volume has dropped significantly. The weekend inflow volume is only about one-third of the previous week. The aluminum factory’s delivery rhythm before the holiday changed; in the case of a sharp drop of 8,800 mt in outflow from warehouses, Gongyi area can still destock 4,000 million mt, reflecting that Gongyi area was affected by weather and has major problems with recent arrivals, and in addition to railway transportation, CNY is approaching, and truck transportation is also affected by the holiday. There is a problem of finding a truck, which makes the supply of aluminum ingots in Gongyi area tight in the near future.

Compared with aluminum ingot inventory, aluminum billets were hit harder by the downstream shutdown for CNY, which started in mid-January and has lasted for more than half a month. According to SMM statistics, the domestic social inventory of aluminum billets on February 5 was 176,200 mt, a significant increase of 35,000 mt compared with last Thursday. Since mid-January, it has been continuously accumulated 95,300 mt, and the total inventory has completed a turnover. As CNY approaches, the main reason for the significant accumulation of inventory this week is the "halving" of aluminum billets outflows from warehouses: last week, domestic aluminum billets outflows from warehouses were 14,100 mt, and the weekly volume fell by 14,400 mt. As downstream extrusion factories mostly took holidays, most small and medium-sized enterprises stopped production, and the demand for aluminum billets was close to freezing point. At the same time, comparing the inventory in the last week before CNY, the current domestic aluminum billets inventory have increased by 60,000 mt compared with the same period in 2023, indicating obvious inventory pressure. Among them, the Foshan area has accumulated 17,900 tons. Although the arrival volume in the two days of weekends decreased by 1,500 mt from the previous month, the outflow from warehouses was only 500 mt, which was one-tenth of the same period last week. The outflow from warehouse last week decreased by 7,500 mt; the Wuxi area has an accumulated inventory of 5,200 mt, and the outflow from warehouse volume fell slightly by 1,200 mt last week; the Nanchang area has an accumulated inventory of 0.75 mt to 1.55 mt, and the inventory has almost doubled; in other areas, Huzhou has an accumulated inventory of 4,000 mt to 35,000 mt, while stocks in Changzhou remained stable and increased slightly.

Regarding the follow-up domestic aluminum ingot inventory operation, SMM predicts that as CNY is approaching, based on SMM research, the amount of ingot casting in the northwest and southwest regions will increase slightly. SMM preliminary estimates indicate that the current domestic daily aluminum ingot production is 35,000 mt/day. The daily output of aluminum ingots during the holidays may reach 40,000 mt/day, but the amount of ingots cast was still down YoY. The total inventory accumulated during the Spring Festival in 2024 may not exceed the level of the same period last year, and is expected to be around 150,000-200,000 mt. Before and after the CNY holiday, domestic aluminum ingots have entered a stage of continued inventory accumulation. Since last week's inventory accumulation was lower than previously expected, SMM revised its subsequent projections of total domestic aluminum ingot inventories. Domestic aluminum ingots on the last day before the holiday in February may accumulate to about 500,000 mt, and the inventory may reach about 650,000-700,000 mt on the first day after the holiday. The inventory high point after the holiday will be around 800,000-900,000 mt.