Aluminum Billet Social Stocks In China Declined  

Since December, aluminum billet supply pressure has lessened due to northern production cuts, keeping arrivals tight in three major consumption areas. Aluminum prices were weak in the first half of this week, but spiked on Thursday, while billet conversion margins rose from high levels. Downstream resistance to high fees led to more ingot use over billets by major factories and slower procurement by smaller ones. Billet outflows from warehouses have dropped WoW, slowing inventory depletion. As of Dec 14, 2023, China's aluminum billet inventory was 82,200 mt, down 1,100 mt from the week's start and 3,400 mt WoW. This is 20,800 mt higher than the same period last year's 61,400 mt, staying high over a three-year comparison. After destocking inflection, aluminum billet social inventory levels fluctuated but trended down. SMM expects stabilizing aluminum prices to lower billet conversion margins. Year-end may see continued weak destocking, backed by solid downstream demand.