The domestic supply of aluminum billets is showing seasonal recovery. What is the current willingness of billet enterprises to resume production?[SMM Analysis]

Spring Recovery! Despite the poor performance of aluminum billet processing fees in the doldrums for a month after the Chinese New Year holiday, affected by high production site inventory, weak downstream demand, and aluminum prices fluctuating at highs, some provinces (such as Guangxi) saw small-scale production cuts or signals of impending cuts in aluminum billet enterprises in March. However, with the deepening of the traditional peak season of "Golden March and Silver April," the destocking of in-plant and social inventories accelerated, coupled with the upward trend of aluminum billet processing fees following the pullback in aluminum prices, small-scale production cuts in the domestic aluminum billet supply side were curbed, and the willingness to operate in aluminum billet enterprises in most regions was significantly boosted. The primary aluminum billet industry as a whole ushered in a seasonal recovery, with the daily average production of domestic primary aluminum billets increasing by 3,000 mt MoM to around 48,000 mt/day.

According to the latest monthly survey data from SMM, the number of enterprises in the SMM primary aluminum billet monthly survey sample currently totals 169, with a total capacity of 31.205 million mt, flat MoM. In March 2025 (31 days), the total production of primary aluminum billets nationwide was 1.489 million mt, up 211,000 mt MoM from February 2025 (28 days), an increase of 16.5%; YoY, it decreased by 19,000 mt, a drop of 1.3%. The operating rate of domestic primary aluminum billets in March was 57.3%, up 8.2% MoM. By region, due to the increase in effective operating days in March, among the provinces with aluminum billet capacity exceeding 1 million mt, except for Guangxi, where aluminum billet producers adjusted production schedules due to persistently low processing fees in March, resulting in a production increase of only about 4% MoM, Shandong, Inner Mongolia, Yunnan, Xinjiang, Guizhou, and other provinces saw production increases exceeding 10%, while Gansu, Qinghai, and other provinces saw increases of over 20%. Other aluminum billet-producing provinces also experienced varying degrees of production increases.

Overall, the consumption peak season of "Golden March and Silver April" continues, and with SHFE aluminum experiencing a significant drop in early April due to macro sentiment fluctuations, processing fees have periodically risen. Although recent processing fees have maintained a range-bound consolidation level, they remain consistently above the industry's average production cost line, and most aluminum billet producers still have a strong willingness to increase production or maintain high operating rates. SMM expects domestic primary aluminum billet production in April to remain stable with a slight increase to around 1.5 million mt compared to March. However, as time progresses into mid-to-late April, the end of the peak season gradually approaches, and concerns about extrusion operating rates begin to emerge, cautioning against the risk of inventory accumulation due to supply-demand mismatches.