Aluminum Ingot Inventory Falls Below 500,000 mt, But Inventory Buildup May Emerge Soon

Despite the off-season, the cancellation of export tax rebates, and disruptions from regional environmental protection-driven production restrictions, which caused the operating rate of downstream enterprises to continue to decline, outflows from warehouses showed a stark contrast to production performance. Aluminum prices fell below 20,000 yuan/mt for the first time in three months, and the domestic inventory buildup turning point has yet to appear, stimulating downstream pre-holiday restocking and stockpiling at lower prices. According to SMM statistics, domestic aluminum ingot outflows from warehouses increased by 23,600 mt WoW to 154,500 mt over the past week, reflecting the onset of year-end and pre-holiday concentrated restocking by downstream players. This was further driven by suppliers clearing inventories at year-end and low aluminum prices, pushing domestic aluminum ingot outflows to a new annual high. Meanwhile, nearly half a month of continuous destocking brought domestic aluminum ingot inventories below the 500,000 mt threshold. As of December 26, 2024, SMM statistics showed domestic aluminum ingot social inventory at 490,000 mt, down 38,000 mt WoW. Regarding arrivals, shipments from Xinjiang remained stable due to coal supply guarantees in mid-December, with some backlog yet to be dispatched. Additionally, domestic arrivals were limited as the market was in the long-term contract negotiation period. Many aluminum smelters had already exceeded their annual sales targets ahead of schedule, significantly slowing the pace of external aluminum ingot shipments. However, with the progress of downstream holiday preparations, SMM expects the inventory buildup turning point to emerge within one to two weeks.