Aluminium Ingot Inventories Fell Before Rising in December, Seasonal Accumulation Cycle Has Begun

SHANGHAI, Jan 11 (SMM) -  The aluminium ingot social inventories across China’s eight major markets stood at 622,000 mt as of January 9, up 46,000 mt from January 5 and 128,000 mt or 26% from the end of December. The figure was 131,000 mt less than the same period last year, though.

The social inventory fell initially and then rose in December, once hitting 476,000 mt, the lowest in 2022 and also lower than the same period of previous years due to delayed arrivals. However, the social inventory spiked in early January as a result of massive arrivals and sluggish consumption in late December and during the New Year's Day.

The social inventory added 84,000 mt or 17% on a weekly basis in the third week before the CNY holiday.

Data over the past five years showed that the inventory accumulation from the fourth week prior to the CNY holiday to the fourth week after the holiday usually accounted for about 10% of the combined aluminium output in the month prior to the CNY holiday and the month in which the CNY holiday took place. There was an exception in 2022 when the inventory accumulation from the fourth week prior to the CNY holiday to the fourth week after the holiday exceeded 1 million mt, representing 17% of the combined aluminium output in the two months, which was caused by the pandemic.

The domestic aluminium production stood at 3.43 million mt in December 2022 and is estimated at 3.32 million mt in January 2023, adding up to 6.75 million mt in two months. Based on the historical data, SMM estimates that aluminium inventory would grow 675,000 mt from the fourth week prior to this year’s CNY holiday to the fourth week after the holiday, including 570,000 mt of ingots and 110,000 mt of billets. The aluminium ingot inventory is expected to rise from 500,000 mt in the fourth week prior to this year’s CNY holiday to 1.07 million mt in the fourth week after the holiday. This figure is still a relatively low level when compared to the same period of previous years.

The actual inventory increment will depend on cargo arrivals and downstream consumption.