[Aluminum billet inventory consolidates at highs; production cuts and falling aluminum prices lead to regional divergence in processing fees [SMM Analysis]]

SMM, September 30:

According to SMM statistics, on September 30, aluminum billet inventory in major consuming regions in China stood at 149,500 mt, up 500 mt WoW from last Thursday and down 5,000 mt from this Monday, with inventory consolidating at highs and basically flat overall. On a year-over-year basis, inventory was about 35,000 mt higher than the same period in 2025 and about 41,000 mt higher than the same period in 2024, with total inventory still at the highest level for the same period in the past four years. From the perspective of warehouse withdrawals, aluminum billet withdrawals from September 21 to September 28 totaled 44,800 mt, holding near 45,000 mt for two consecutive weeks. By region, Foshan inventory stood at 69,500 mt, down 3,000 mt from last Thursday; Nanchang at 6,000 mt, down 3,500 mt; Wuxi at 26,500 mt, up 5,000 mt; Huzhou at 29,000 mt, up 2,000 mt; and Changzhou at 18,500 mt, basically flat. This round of inventory consolidation at highs was driven by both supply and demand: Demand side, pre-holiday stockpiling entered its final stage, with warehouse withdrawals holding at high levels but slowing marginally; supply side, maintenance-related production cuts continued at aluminum billet producers in Guangxi and Xinjiang, but arrivals in Wuxi and Huzhou increased periodically, pushing up inbound pressure and leading to notable divergence in regional inventory trends.

During the week, aluminum prices drifted lower, with SMM A00 spot aluminum prices pulling back from 24,240 yuan/mt last Thursday to 24,030 yuan/mt on September 30, a cumulative decline of about 210 yuan/mt. Against the backdrop of falling aluminum prices, processing fee trends diverged notably across regions. By region, in Foshan, φ90 aluminum billet processing fees were quoted at 100 yuan/mt and φ120 at 50 yuan/mt, each down 30 yuan/mt from last Thursday; in Wuxi, φ90 aluminum billet was quoted at 410 yuan/mt and φ120 at 280 yuan/mt, up 80 yuan/mt and 70 yuan/mt respectively from last Thursday; in Nanchang, φ90 aluminum billet was quoted at 330 yuan/mt and φ120 at 250 yuan/mt, up 130 yuan/mt and 150 yuan/mt respectively from last Thursday. The divergence in processing fees during the week was mainly driven by regional differences in arrivals: Foshan faced relatively high supply pressure, and with high aluminum premiums, processing fees remained under pressure, with producers continuing to offer concessions to facilitate transactions; Wuxi saw increased arrivals, but with downstream pre-holiday restocking demand, supply-side pressure remained manageable, and there were expectations for processing fees to hold firm. Post-holiday processing fee trends are expected to depend on aluminum price movements and the pace of post-holiday arrivals, with supply-side pressure likely to be relatively significant after the holiday.