Aluminum Billet Inventory Buildup Pace Accelerates, Processing Fees Remain Under Pressure Amid Supply-Demand Mismatch [SMM Aluminum Billet Weekly Review]

SMM News on December 31:

According to SMM statistics, aluminum billet inventory in major domestic consumption areas totaled 139,000 mt on December 31, up 2,500 mt from Monday and 14,500 mt WoW. During December 22-27, domestic aluminum billet warehouse withdrawals amounted to 45,000 mt, down 900 mt from the previous week. Arrivals increased significantly in consumption areas during the week due to the release of previously accumulated inventory from Xinjiang, while end-user sentiment showed fear of high prices and downstream operating rates remained weak. Amid an oversupply situation, aluminum billet inventory saw rapid buildup. Although aluminum billet producers' operating rates gradually pulled back approaching year-end, demand-side segments experienced varying degrees of seasonal declines, and supply-side pressure became more pronounced. Aluminum billet inventory is expected to maintain its buildup pace in the short term.

This week, after aluminum prices hit 23,000 yuan/mt, they continued to fluctuate at highs and consolidate. Affected by supply-side increases, aluminum billet processing fees were generally under pressure and declined. Specifically, processing fees in Foshan were quoted at 220-270 yuan/mt, down 130 yuan WoW from Wednesday; Wuxi at 130-220 yuan/mt, up 10 yuan; Nanchang at 100-150 yuan/mt, up 10 yuan slightly, but overall remaining at low levels. The changes were mainly due to increased arrivals of aluminum billets in Foshan leading to oversupply, coupled with high inventory in Wuxi and Nanchang and weak end-use consumption, putting significant pressure on processing fees. Looking ahead to next week, continued arrivals of aluminum billets from northern regions will intensify supply pressure. Processing fees are expected to further decline, remaining in the doldrums with limited room for a noticeable rebound.