On March 4, 2024, SMM data showed that the total social inventory of aluminum ingots was 816,000 tons, (the amount for sale was 690,000 tons), up 27,000 tons WoW and 325,000 tons compared with the pre-holiday level. The aluminum ingot inventory growth continued but slowed down slightly in March, remaining at the lowest level for the same period in nearly seven years. The current inventory of aluminum ingots dropped by 402,000 tons YoY, and the inventory growth dropped by 149,000 tons. The inventory growth this weekend was 3.3%, compared with 2.4% in the same period last year. The outflow of aluminum ingots from warehouses in the second week after the holiday was 98,800 tons, up 17,700 tons WoW.
Looking back at the inventory before and after the Spring Festival in previous years, it may take 5-6 weeks for aluminum ingot inventory to decline after the holiday, but the inventory growth will slow down significantly after 3-4 weeks after the holiday. The inventory performance after this year's holiday has this trend for the time being. SMM believes that in the traditional peak season in March, the consumption of aluminum ingot stocks is expected to accelerate, and the overall inventory growth of domestic aluminum ingot will slow down. SMM predicts that domestic aluminum ingot stocks may be reach between 800,000-900,000 tons in the first half of March.
Although domestic aluminum ingots faced with certain inventory pressure after the holiday, the supply in the domestic market is slightly loose. The opening of the import window suppressed the spot, and the recent spot premium and discount has therefore been under pressure. However, the inventory in the bonded area is still at a low level, and the impact on domestic social stocks of aluminum ingots may be limited. In traditional peak season of March, as the operating rate of downstream companies continues to increase, it is expected that the outflows of aluminum ingots from warehouses will have room to rise further in peak seasons. SMM predicts that low inventory and weak inventory growth will continue to support aluminum prices after the holiday.
In terms of regions, Gongyi area only has 3,000 tons of inventory, and the outflow from warehouses increased by 7,300 tons. The inventory performance was the most eye-catching among the three places. It is due to the improvement of local downstream operation and the increase in demand for raw materials. The inventory growth in Wuxi slowed down slightly over the weekend, mainly due to the decrease in arrivals. The volume of arrivals over the weekend decreased by more than 3,000 tons WoW, while the outflow from warehouses continued to pick up. Recently, discounts in east China also narrowed slightly. The inventory growth in Foshan remained stable, and the outflow from warehouse has also improved, but it is difficult to prevent spot discounts. SMM believes that the price difference between Guangdong and Shanghai has shown signs of losses, which reflects that the supply and demand of aluminum ingots in south China is weaker than that in east China. In addition to the different downstream industrial structures, the recent strong outflows of aluminum billets from warehouses also contributed.
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