Due to the further decline in prices, last week's aluminum billet pick-up from warehouses rebounded slightly, increasing by 4,200 mt WoW to 42,400 mt. As there were no significant concentrated arrivals last weekend, domestic inventory also slightly decreased at the beginning of this week. As of July 18, domestic aluminum billet social inventory was 140,700 mt, down 6,000 mt WoW. With the reduction in supply from the north, the inventory in east China improved. However, due to a slight increase in supply in south China, there was a slight accumulation of inventory mid-week in south China. Domestic aluminum billet inventory remains at a high level for the same period in nearly three years, exceeding last year's level by 51,000 mt. In mid-July, with weak demand and slightly excessive supply, domestic destocking will remain weak. It is expected that the overall inventory in July will remain between 130,000-180,000 mt.
With the narrowing of the Guangdong-Shanghai price spread, the slight rebound in aluminum extrusion sector operating rate this week, and changes in the inventory, the price spread of conversion margins between south and east China has basically been restored, approaching the same in three regions. As of July 18, the conversion margins for φ120 aluminum billets in Wuxi and Nanchang both rose to 350 yuan/mt, up 150 yuan/mt WoW. Recently, low-price aluminum billet in Nanchang have been in short supply, with sellers holding firm on prices, while downstream buyers are mainly bearish. With the recent stabilization of conversion margins in south China above 300 yuan/mt, manufacturers in neighboring provinces generally had a profit margin, boosting production and shipment. The arrivals of aluminum billets in south China have slightly increased, and the sustainability of destocking and rising conversion margins is somewhat insufficient. Currently, the conversion margin for φ120 aluminum billets in Foshan is reported at 380 yuan/mt, flat WoW.
