The pace of aluminum billet inventory destocking has slowed down, and processing fees in three regions are under pressure to consolidate. [SMM Aluminum Billet Weekly Review]

SMM News on May 22:

Regarding aluminum billet inventory, according to SMM statistics, the inventory of aluminum billets in major domestic consumption areas stood at 1.308 million mt on May 22, a decrease of 7,400 mt from last Thursday, with inventory remaining firmly at a low level compared to the same period in the past three years. After falling below 1.5 million mt, aluminum billet inventory continued to decline, but the pace of destocking slowed down somewhat this week. In terms of outflows from warehouses, the total outflows of domestic aluminum billets from May 12 to May 18 amounted to 49,500 mt, an increase of 2,900 mt from the previous week, but still lower than the 52,400 mt recorded in the same period last year. This further confirms that the continuous decline in current aluminum billet inventory is significantly influenced by the supply side, while demand performance remains moderate. Amid the shift from peak to off-season consumption, aluminum billet producers, adhering to a produce-based-on-sales strategy, maintained low in-plant inventory. The market primarily engaged in truck-based cargo transactions, leading to a reduction in goods shipped to warehouses. The tightening of the supply side provided momentum for the continuous destocking of aluminum billet inventory. However, from the perspective of this week's consumption, further declines in aluminum billet inventory have encountered significant resistance. Poor market trading sentiment, coupled with stable production rhythms among enterprises, suggests that aluminum billet inventory may exhibit a bottoming-out structure. SMM expects aluminum billet inventory to oscillate within the range of 100,000-150,000 mt.

Regarding processing fees, aluminum prices consolidated within a range this week. However, due to heightened wait-and-see sentiment among downstream players, the market primarily engaged in transactions at driven-down prices, putting pressure on aluminum billet processing fees. Although suppliers were willing to hold prices steady and slow down outflows, there was no shortage of low-priced cargo circulating in the market. Downstream players selectively restocked to a moderate extent, resulting in overall weak trading. In terms of processing fees in the three major regions, as of May 22, 2025, the aluminum billet market in Foshan reported processing fees of 280/330 yuan/mt, a decrease of 10 yuan/mt from last week. In Wuxi, aluminum billet processing fees were reported at 300/350 yuan/mt, a decrease of 20 yuan/mt from last week. In Nanchang, processing fees were reported at 250/300 yuan/mt, a decrease of 100 yuan/mt. (Unit: yuan/mt)

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