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

SMM 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 totaled 45,000 mt, down 900 mt WoW. Arrivals increased significantly in consumption areas during the week due to the release of previously accumulated inventory from Xinjiang, while end-users showed fear of high prices and downstream operating rates remained weak. Amid oversupply, aluminum billet inventory saw rapid buildup. Although aluminum billet producers' operating rates pulled back gradually approaching year-end, demand-side segments saw varying degrees of seasonal cuts, and supply-side pressure became more evident. Aluminum billet inventory is expected to maintain its buildup pace in the short term.

This week, aluminum prices hit 23,000 yuan/mt and then fluctuated at highs. Affected by supply increases, aluminum billet processing fees were generally under pressure. Specifically, processing fees in Foshan were 220-270 yuan/mt, down 130 yuan WoW; Wuxi at 130-220 yuan/mt, up 10 yuan; Nanchang at 100-150 yuan/mt, up 10 yuan slightly, but overall remained low. The changes were mainly due to increased arrivals in Foshan leading to oversupply, coupled with high inventory in Wuxi and Nanchang and weak end-use consumption, putting significant pressure on processing fees. Next week, continued arrivals of northern aluminum billets are expected to intensify supply pressure, and processing fees are likely to pull back further, remaining in the doldrums with little room for a rebound.