September aluminum ingot destocking slightly exceeded expectations, providing effective support for futures and spot prices

In September, domestic aluminum ingot destocking accelerated, continuously breaking the 800,000 mt and 750,000 mt marks, with the destocking speed slightly exceeding our previous expectations. As of September 12, 2024, SMM reported the total social inventory of aluminum ingots was 748,000 mt, down 46,000 mt WoW, and down 82,000 mt from the peak in August. By region, influenced by regional price differences and varying downstream demand, pre-Mid-Autumn Festival inventory performances varied. According to the SMM survey, although the inter-regional transfer window did not open, some aluminum plants adjusted their shipping plans and schedules due to the recent price spread between Henan and Shanghai. This resulted in a reduction of in-transit volumes destined for east China and a significant increase in volumes destined for central China, which is expected to be delivered in batches before the Mid-Autumn Festival. SMM estimates that with efforts from both supply and demand ends, and with the accelerated destocking of domestic aluminum ingots in early September slightly exceeding expectations, inventory will show a significant destocking trend within the month, providing strong support for recent aluminum prices. September domestic aluminum ingot inventory will operate around 700,000-800,000 mt, and by the end of September, domestic aluminum ingot inventory is expected to fall below 700,000 mt. However, attention should be paid to the risk of inventory accumulation due to increased outflows from warehouses after aluminum prices rise, and concentrated arrivals during the Mid-Autumn and National Day holidays.