Domestic aluminum ingot inventory stabilized after the holiday, with spot discounts persisting

During the Dragon Boat Festival, there was a slight inventory increase of domestic aluminum ingots. On June 13, 2024, SMM data showed that the total social inventory of aluminum ingots was 781,000 mt, (the amount for sale stood at 655,000 mt), up 3,000 mt from June 6. Compared to the same period in the past two years, domestic aluminum ingot inventory was nearly 260,000 mt higher YoY and was flat compared to the same period of 2022. Although the YoY performance was not satisfactory, it is encouraging that cargo pick-up in the week provided some confidence for destocking and spot premiums and discounts in June. With spot aluminum prices pulling back significantly from their highs at the beginning of June, pick-up from warehouses rebounded significantly, with domestic aluminum ingot pick-up from warehouses increasing by 20,600 mt WoW to 118,300 mt. Although domestic aluminum ingot inventory stabilized after the Dragon Boat Festival, the full resumption of billet factories in Guangxi at the beginning of June is expected to lead to a decline in local ingot production. Additionally, with the recent significant pullback in aluminum prices, downstream companies were willing to pick up goods, and pick-up from warehouses rebounded significantly. Domestic aluminum ingot inventory has shown signs of declining, which is expected to drop slowly. We need to pay close attention to the progress of aluminum production resumption in Yunnan and the consumption performance of downstream during the off-season.