SMM, August 27:
Aluminum billet inventory fell to 139,500 mt, warehouse withdrawals recovered, and processing fees were broadly under pressure. According to SMM statistics, China's aluminum billet inventory in major consumption areas recorded 139,500 mt on August 27, down 5,000 mt from last Monday and down 3,500 mt from last Thursday, ending the previous continuous inventory buildup trend and turning to a slight decline during the week. Compared with the same period, inventory was 5,500 mt higher than in 2025, 29,400 mt higher than in 2024, and 69,900 mt higher than in 2023, with total inventory still at a high level for the same period in recent years. From the perspective of warehouse withdrawals, aluminum billet withdrawals recorded 36,500 mt from August 17 to August 24, up sharply by 6,200 mt WoW, with market transaction activity markedly recovering, mainly driven by a decline in the aluminum price center last week, which spurred accelerated downstream procurement. The slight decline in aluminum billet inventory during the week was driven by two main factors: on one hand, recent warehouse inflows of aluminum billet were low, with the arrival pace slowing across regions, and supply-side inflows fell short of expectations; on the other hand, the downward movement of the aluminum price center last week stimulated concentrated downstream procurement, leading to a rebound in warehouse withdrawals and a slight destocking of inventory. Specifically, inventory in the Foshan area fell to 62,500 mt due to a significant reduction in weekly arrivals, making it the main force behind the drop in total inventory; the Wuxi area saw a modest inventory buildup to 25,500 mt due to increased arrivals. However, the inventory buildup trend for aluminum billet has not reversed. The operating rate of aluminum billet producers is still gradually rising, with capacity in Yunnan continuing to be released, and the supply side still showing growth. Given the oversupply situation, aluminum billet inventory is expected to shift back to inventory buildup next week. Attention should be paid to downstream procurement sentiment and changes in the operating rate at aluminum billet producers.
This week, the aluminum price center stopped falling and rebounded. The SMM A00 spot aluminum price rose from 23,600 yuan/mt last Thursday to a weekly high of 23,920 yuan/mt, an overall increase of about 320 yuan/mt from last Thursday. Against the backdrop of the aluminum price recovery, downstream wait-and-see sentiment intensified and market demand weakened somewhat. Aluminum billet processing fees across regions fell sharply overall, showing a pattern of consolidation and pullback followed by accelerated bottom-fishing during the week. By region, in the Foshan area, processing fees for φ90 aluminum billets were reported at 140 yuan/mt and for φ120 billets at 90 yuan/mt, each down 170 yuan/mt from last Thursday; in the Wuxi area, φ90 billets were at 320 yuan/mt and φ120 billets at 240 yuan/mt, down 240 yuan/mt and 260 yuan/mt, respectively, from last Thursday; in the Nanchang area, φ90 billets were at 200 yuan/mt and φ120 billets at 150 yuan/mt, down 250 yuan/mt from last Thursday. Processing fee trends diverged notably during the week: in the Foshan area, heightened downstream wait-and-see sentiment due to the aluminum price rebound drove a significant decline in processing fees, with φ120 fees dropping to a low of 90 yuan/mt; in the Wuxi area, there was initially some sentiment to hold prices firm at the start of the week, but as supply expanded and demand weakened, the decline in processing fees widened noticeably, with φ120 fees down 260 yuan/mt from last Thursday, leading the decline. The current oversupply pattern persists, and the operating rates at aluminum billet producers are still gradually climbing, with supply continuing to expand. It is expected that aluminum billet processing fees will remain under pressure at current levels next week, with further downside room. Attention should be paid to regional arrivals and the transmission of aluminum price trends to processing fees.
