Aluminum Billet Inventory First Surpasses the 200,000 Mark, Processing Fees Fluctuate Rangebound Due to Insufficient Demand [SMM Aluminum Billet Weekly Review]

SMM, January 20:

Regarding aluminum billet inventory, according to SMM statistics, as of January 20, domestic aluminum billet social inventory stood at 200,800 mt, with an inventory buildup of 49,700 mt WoW. As downstream profile enterprises have completed pre-holiday stockpiling and aluminum prices returned to the 20,000 yuan/mt level, buyers adopted a wait-and-see attitude, while aluminum billet arrivals increased, significantly accelerating the inventory buildup pace. On a YoY basis, the gap with the same period last year widened to 90,100 mt, remaining at a high level for the same period in the past three years and far ahead. Currently, domestic aluminum billet inventory in January is expected to continue building up, with this week's domestic inventory already exceeding expectations, breaking the 200,000 mt mark. Post-holiday inventory is expected to peak at around 300,000-350,000 mt. Regarding outflows from warehouses, as pre-holiday stockpiling has ended, last week's aluminum billet outflows from warehouses dropped sharply by 13,100 mt WoW to 29,000 mt.

This week, macro uncertainties arose due to the delay in new tariffs, and with the increase in aluminum inventory, fundamental pressure intensified, leading to a decline in aluminum prices. Aluminum billets, affected by weak market sentiment and insufficient rebound in processing fees, hovered at low levels. Although aluminum billet manufacturers had expectations for production cuts before the holiday, considering the absorption of liquid aluminum and the increased allocation of liquid aluminum from aluminum smelters to billet plants, manufacturers also plan to maintain the operation of a small portion of capacity. By region, downstream enterprises in Foshan have mostly gone on holiday, suppliers adopted a laid-back pricing approach, and buyers showed lukewarm responses. The processing fee for φ120 aluminum billets was 100 yuan/mt, up 10 yuan/mt WoW. In Wuxi, market activity was sparse, and transactions progressed slowly, with the processing fee for φ120 aluminum billets at 150 yuan/mt, up 20 yuan/mt WoW. In Nanchang, market supply was replenished, but demand remained weak, and trading sentiment was subdued. The processing fee for φ120 aluminum billets was 180 yuan/mt, up 20 yuan/mt WoW.
 

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