Inventory fluctuated downward as increased warehouse withdrawals accelerated destocking, and recovering consumption drove processing fees back above parity [SMM Aluminum Billet Weekly Review]

SMM News, March 5:

According to SMM statistics, as of March 19, aluminum billet inventory across major consumption regions in China totaled 369,500 mt, down 16,500 mt WoW. Although the inventory inflection point had initially taken shape and aluminum billet inventory had smoothly entered a destocking pace, overall inventory remained at a historically high level, about 80,000 mt higher than the same period last year, and supply-side pressure had eased somewhat but was still far from relaxed. In terms of warehouse withdrawals, total weekly aluminum billet warehouse withdrawals reached 61,500 mt during March 9-16, up 5,000 mt from the previous week. From the perspective of warehouse withdrawals, post-holiday demand recovery had made encouraging progress. Although consumption lacked peak-season strength, rigid demand still performed relatively well under the restraint of high aluminum prices. Against the backdrop of continued recovery in downstream consumption, aluminum billet inventory is expected to maintain a downward trend. However, weekend arrivals are usually higher than mid-week, so inventory may fluctuate downward. Inventory is expected to fall below 350,000 mt by month-end March.

During the week, as geopolitical conflict in the Middle East continued to spread, market macro sentiment changed significantly, aluminum prices came under pressure and fell sharply, and aluminum billet processing fees recovered to above parity. By region, processing fees in Foshan were quoted at 30/80, up 270 yuan/mt WoW; Wuxi was quoted at 100/150 yuan/mt, up 350 yuan/mt WoW; and Nanchang was quoted at 150/200 yuan/mt, up 350 yuan/mt WoW. Although aluminum billet processing fees rebounded slightly, the increase in processing fees was smaller than the decline in aluminum prices, and the absolute price of aluminum billet was still falling continuously. In some regions, absolute prices had already dropped below the monthly average transaction price, and processing fees in the spot order market showed a price advantage. Although aluminum billet inventory remained at a historically high level, downstream consumption sentiment improved. Under the influence of aluminum prices, aluminum billet processing fees are expected to rebound and run above parity.