Pre-Holiday Restocking Accelerates Inventory Reduction, Aluminum Billet Processing Fees Under Pressure [SMM Aluminum Billet Weekly Review]

SMM April 24 News:

As of April 24, the inventory of aluminum billets in mainstream domestic consumption areas stood at 177,800 mt, down 18,900 mt from Monday this week and a decrease of 31,400 mt WoW from last Thursday, indicating a significant acceleration in destocking speed. In terms of outflows from warehouses, the total outflows of aluminum billets during April 14-20 reached 68,900 mt, an increase of 7,800 mt WoW, reflecting sustained consumption performance. The release of pre-Labour Day holiday stockpiling demand, coupled with aluminum prices fluctuating at lows, stimulated downstream restocking at low levels, driving accelerated inventory digestion and successfully breaking through the key level of 200,000 mt, even exerting pressure towards the lower level of 150,000 mt. In addition to pre-holiday restocking, recent low inventory levels at manufacturers led to an increase in aluminum billet processing fees, while downstream players favored warehouse sources due to cost advantages, further aiding the accelerated destocking of aluminum billets.

On April 24, aluminum prices continued to hold up well, but processing fees remained under pressure, mainly due to suppliers actively lowering quotes to promote transactions, while downstream players maintained a strategy of driving down prices for purchases. By region, Foshan's processing fees were quoted at 290/340 yuan/mt, down 30 yuan/mt WoW; Wuxi was quoted at 280/350 yuan/mt, down 30 yuan/mt and 10 yuan/mt, respectively; Nanchang fell to 280/330 yuan/mt, down 30 yuan/mt WoW. Recently, regional aluminum price spreads narrowed, with aluminum billet processing fees in the three regions fluctuating rangebound around 300 yuan/mt. The current rebound in aluminum prices has compressed downstream profits, and with the ample supply in the market unchanged, the upside room for processing fees is limited in the short term. If aluminum prices rise rapidly after the holiday, it may further exacerbate downstream wait-and-see sentiment, leading to increased pressure on processing fees.

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