Post-holiday concentrated arrivals slowed decline in aluminum inventories across China’s major regions

After the Mid-Autumn Festival, concentrated arrivals appeared in various major domestic consumption areas. Although domestic inventory maintained a slight destocking trend compared to last Thursday, it was mainly supported by Wuxi's excellent pre-holiday destocking performance. Post-holiday inventory performance lacked highlights. As of September 19, 2024, SMM statistics showed a total aluminum ingot social inventory of 743,000 mt, down 5,000 mt WoW, and down 87,000 mt from the August peak, but still 214,000 mt higher YoY. In the week before the holiday, domestic aluminum ingot outflows from warehouses increased by 3,500 mt to 129,600 mt. However, traditional consumption sectors are expected to see a significant decline in outflows this week due to the holiday and high aluminum prices. By region, Gongyi saw a significant increase in in-transit volumes before the holiday, leading to a post-holiday inventory build-up of 7,000 mt. Foshan also saw a holiday-induced inventory build-up of 1,000 mt. Wuxi had no significant increase, but high prices still suppressed downstream purchases. SMM expects the destocking cycle to continue in September, with domestic aluminum ingot inventory running around 700,000-750,000 mt in the second half of the month. Optimistically, domestic aluminum ingot inventory could fall below 700,000 mt by the end of September. However, attention should be paid to the risk of reduced outflows due to rising aluminum prices and short-term inventory build-up from concentrated arrivals during the holiday.