Aluminum ingot inventory struggled to resume normal destocking, with spot discounts expanding

On May 30, 2024, SMM reported that the total social inventory of aluminum ingots was 781,000 mt, (the amount for sale stood at 655,000 mt), up 14,000 mt WoW and 186,000 mt YoY. For nearly half a month, domestic aluminum ingot inventory has been accumulating continuously, with supply increasing but cargo pick-up from warehouses remaining weak, resulting in significant inventory pressure. SMM's analysis is as follows: (1) The pressure from recent arrivals continues to increase, with a slight increase in the inflow of Rusal aluminum recently. The resumption progress in Yunnan is good and may be completed in June, gradually highlighting supply pressure. Over the weekend, two trains carrying Rusal aluminum arrived in Gongyi, mainly under long-term contracts. (2) During the transition between peak and off-peak seasons, high aluminum prices continue to inhibit cargo pick-up from warehouses. The weekly amount of aluminum ingot picked up from warehouses was 102,300 mt, down 12,500 mt WoW, hitting a new low since the Labour Day holidays and remaining at a five-year low for the same period. Cargo pick-up from warehouses in major consumption areas all declined, with pick-up in Gongyi's down by over 10,000 mt WoW. SMM believes that the domestic aluminum ingot inventory performance can no longer support the fundamentals, and with more arrivals expected. It is anticipated that domestic aluminum ingot inventory will struggle to resume normal destocking in the short term, fluctuating between 750,000-800,000 mt.