Downstream centralized replenishment eased aluminium billet inventory pressure

According to SMM statistics, the social inventory of domestic aluminium billet stood at 83,000 mt on January 11, an increase of 1,000 mt WoW, a decrease of 2,400 mt compared with January 1, and a decrease of 11,800 YoY, which was a 4-year low. The rapidly rising inventory of aluminium billet eased after New Year's Day. According to SMM's analysis, south China mainly contributed to the destocking of aluminium billet, while the inventory in other regions increased slightly. In south China, as the market hardly accepted the high conversion margins, the increase in conversion margins were significantly slower than the decline in aluminium prices, dragging down the purchase prices last week and driving downstream intensive pre-holiday replenishment. The arrivals of aluminium billets in south China were flat WoW in three days of the week, and the outflows rose by 4,500 mt WoW.

On the supply, SMM data showed that China’s aluminium billet output stood at 1.303 million mt in December 2023 (31 days), a MoM decrease of 15,000 mt or 1.14%. The operating rate of aluminium billet plants dipped by 0.4 points MoM to 65.0% in December. Inner Mongolia, Xinjiang, Shandong, and Yunnan saw the largest declines. The annual production of aluminium billet was 15.417 million mt in 2023, up 9.6% MoM.