Aluminum: The sharp drop in aluminum prices has not significantly driven destocking, with Wuxi's inventory far exceeding that of Foshan

On July 25, 2024, SMM reported that the total social inventory of aluminum ingots was 790,000 mt, (the amount for sale stood at 664,000 mt), down 7,000 mt WoW and 2,000 mt from July 22, but it is still 254,000 mt higher YoY. Last week, domestic aluminum ingot pick-up from warehouses increased by 11,100 mt WoW to 124,700 mt. SMM believes that the significant drop in aluminum prices somewhat stimulated the pick-up from warehouse. Despite a slight destocking of domestic aluminum ingots this week, the current inventory remains at a three-year high, nearing 800,000 mt, which continues to pressure both futures and spot aluminum prices. Regionally, Wuxi's aluminum ingot inventory continued to accumulate, surpassing 300,000 mt. This is due to the still high shipment volumes from northern aluminum smelters, leading to concentrated arrivals in Wuxi by the weekend, while pick-up from warehouses declined. Similarly, Gongyi's destocking remains weak. Foshan has been in a continued destocking since early July, with nearly three consecutive weeks of destocking. After a 11,000 mt destocking WoW, the inventory gap between Foshan and Wuxi widened to 77,000 mt. SMM expects that although domestic aluminum ingot inventory may slightly decrease in July, the decline will be limited, likely fluctuating between 750,000 and 850,000 mt.