Aluminum billet inventory rose slightly before CNY holidays, while the processing fees fell due to demand

According to SMM statistics, the social inventory of domestic aluminum billet across China’s five major markets stood at 110,700 mt on January 25, up by 26,900 mt WoW, up by 11,100 mt compared with January 22, and up by 56,500 mt YoY, remaining at a two-year low. As the CNY holidays drawing near, aluminum billets inventory grew rapidly, mainly as downstream extruders gradually slash or halt their production and some small and medium-sized enterprises stopped production, dragging down the demand. The outflows from warehouses also showed a downward trend. The inventory increase of aluminum billets in the third week before CNY holidays in 2024 was 26,900 mt, up by 32.1% YoY. The recovery of end-user consumption was short of expectations, and extruders showed little intention of stocking up amid weak demand and pessimistic market expectations. Since January, high aluminum prices undermined downstream sentiment for purchasing.

In terms of processing fees, the price difference of aluminum billets in the three major cities widened recently. In Guangdong, the prices for large and small billets were 100 and 160 yuan/mt, down 180 yuan/mt WoW. Prices for large and small billets in Wuxi were 230 and 330 yuan/mt, down 140 and 110 yuan/mt, while prices in Nanchang were 230 and 280 yuan/mt, down 70 and 40 yuan/mt WoW. Recently, the center of aluminium billets processing fees fell. SMM believes that as downstream extruders gradually shut down, the pre-holiday processing fees may go down.