Aluminum Billet Inventory Dropped Another 28,500 mt Within the Week, Processing Fees Showed a "South Strong, East Weak" Pattern [SMM Aluminum Billet Weekly Review]

SMM, May 21:

According to SMM statistics, as of May 21, aluminum billet inventory across major consumption regions in China totaled 205,500 mt, down 28,500 mt WoW (Thursday), with destocking accelerating. Warehouse withdrawals totaled 55,700 mt during May 12-18, an increase of 14,200 mt from the previous week. Supply side, warehouse inflows declined notably. On one hand, the impact of earlier production cuts by aluminum billet producers in Xinjiang gradually materialized, with warehouse inflows in Wuxi dropping significantly. On the other hand, production cuts by aluminum billet producers in Guangxi resulted in limited arrivals in South China, and local processing fees recovered slightly. Demand side, performance remained relatively stable. Persistently low processing fees in Wuxi combined with aluminum price pullbacks prompted downstream manufacturers to purchase at lower prices. Aluminum billet consumption continued to recover over the past two weeks, driving destocking. Currently, aluminum billet social inventory destocking, primarily driven by supply-side factors, slightly exceeded expectations. With supply-side conditions maintained and demand stable, aluminum billet inventory is expected to sustain the destocking trend, with inventory next week expected to pull back to below 200,000 mt.

Within the week, aluminum prices first fell then rose, showing an overall fluctuating trend of moving sideways, with processing fees displaying a pattern of "strong in the south, weak in the east." By region, Foshan processing fees were quoted at 350/400 yuan/mt, up 170 yuan/mt WoW; Wuxi was quoted at 180/260 yuan/mt, a rebound of 50/60 yuan/mt WoW; Nanchang was quoted at 190/240 yuan/mt, up 140 yuan/mt WoW. Wuxi had relatively high aluminum billet inventory, and producers had the willingness to recover funds, with the market showing a trend of pushing for lower prices to facilitate shipments. In South China, however, arrivals dropped sharply, and the market saw sentiment to hold prices firm, with processing fees relatively moderate. Within the week, absolute prices of aluminum billets in both Wuxi and South China remained mostly in the range of 24,500-24,600 yuan/mt, with processing fees adjusting in line with fluctuations in aluminum prices. It is expected that as aluminum billet inventory enters a virtuous cycle, market processing fees will gradually recover.