As domestic aluminum prices fell from highs in June, the domestic aluminum billet industry has some relief. During the traditional off-season, the production of aluminum billets varied across regions. Although the output and operating rate of domestic aluminum billets have declined MoM for three consecutive months, this is mainly due to fewer operating days in June. The average daily output of domestic aluminum billets stabilized at around 47,000 mt/day. According to the latest monthly survey data from SMM, the number of sample enterprises in the SMM aluminum billet monthly survey currently totals 168, an increase of 2 from the previous month; the total capacity is 30.905 million mt, an increase of 110,000 mt. In June 2024 (30 days), the total output of aluminum billets nationwide was 1.424 million mt, a decrease of 33,000 mt from May 2024 (31 days), a decline of 2.3%; it increased by 104,000 mt YoY, an increase of 7.9%. The operating rate of domestic aluminum billets in June was 55.3%, down 1.5% MoM, and up 10.6% YoY.
In June, there was a noticeable difference in the performance of aluminum billet supply between the north and south of China. Due to the continuous expansion of the Guangdong-Shanghai price spread, the conversion margins of aluminum billets in south China rose steadily in June. By late June, aluminum billet factories in neighboring provinces had already seen some profit margins, which accelerated the resumption of production in regions such as Guangxi and Guizhou. Meanwhile, the volume of aluminum billets sent from billet factories in north China to east China became more concentrated. However, the rebound in conversion margins in places like Wuxi and Nanchang in June was relatively weak, leading to varying degrees of production decline in major northern aluminum billet-producing provinces such as Shandong, Inner Mongolia, Xinjiang, and Qinghai.
Overall, in July, the downstream market is currently experiencing a strong off-season atmosphere. There are no clear signs of demand recovery in July, and billet factories in south China, such as Guangxi, have almost no surplus capacity for increased production. SMM expects the growth in domestic aluminum billet production in July to be quite limited, with the average daily output remaining largely stable.
