Supply shortage of aluminum billets is unlikely to improve

In contrast with the inventory of aluminum ingots, the performance of domestic aluminum billets inventory in the week seems to be affected by the holidays and high aluminum prices, but the outflow from warehouses in major consumption areas improved mid-week. Excluding the expansion of statistics sample, the domestic aluminum billets inventory should have dropped slightly mid-week. According to SMM statistics, the domestic social inventory of aluminium billets on Apr 11 was 254,000 mt, up 14,700 mt from Apr 3, up 5,000 mt from Apr 8 and 92,800 mt YoY, remaining at the lowest compared to the same period of past four years. However, it is worth noting that since April, the domestic inventory continued to increase. As of Apr 11, the inventory grew by 22,700 mt compared with the end of March, and the inventory gap with the same period in previous years also showed signs of widening. The high inventory is still worrying. The inventory in Wuxi and Changzhou fell slightly mid-week, while inventory in Foshan, Huzhou and Nanchang showed varying degrees of accumulation.

As aluminum prices stabilized at 20,000 yuan/mt, the center of processing fees shifted downward significantly. The processing fees of certain specifications of alluminum billets in Nanchang and Guangdong markets fell to double digits. In April, supply shortage is unlikely to improve. Suppliers held processing prices firm, but downstream extrusion factories lowered their purchasing prices. We need to pay attention to changes in the supply and demand of aluminum billets and the performance of downstream demand in the peak season.