Aluminum: Social inventory of aluminum ingots increased to a new high in H2, further suppressing spot and futures prices

On July 18, 2024, the SMM survey reported a total social inventory of aluminum ingots at 797,000 mt, (the amount for sale stood at 671,000 mt), up 8,000 mt from July 11 and up 10,000 mt from July 15. Prior to this, domestic aluminum ingot inventory declined slowly, with a cumulative destocking of 4,000 mt. However, following the restocking mid-week, the current domestic aluminum ingot inventory has reached a new high for H2, up 243,000 mt YoY, further suppressing aluminum spot and futures prices. Regionally, the inventory performance disparity between south China, east China, and central China continued to widen mid-week, with Wuxi's inventory exceeding Foshan's by 60,000 mt. According to the SMM survey, the Wuxi mainly received shipments from Xinjiang, Inner Mongolia, Shaanxi, and Qinghai, with Xinjiang accounting for the largest share. This is due to weak aluminum processing industry in North-west China, poor local demand, and the impact of the Guangdong-Shanghai price spread, which has significantly reduced shipments to south China. Together with some sea transport shipments, a small amount of aluminum ingots from Yunnan and Guizhou also chose to be shipped to east China. SMM expects that the decline in domestic aluminum ingot inventory in July will be limited, likely fluctuating between 750,000-850,000 mt.