Aluminum Billet Inventory Successfully Drops Below 280kt, Destocking Logic Persists but Demand Recovery Awaits Verification [SMM Aluminum Billet Weekly Review]

SMM April 23 News:

According to SMM statistics, as of April 23, aluminum billet inventory across major consumption regions in China totaled 278,000 mt, down 14,000 mt WoW from last Thursday, successfully falling below 280,000 mt, largely in line with expectations at the beginning of the month. On warehouse withdrawals, aluminum billet warehouse withdrawals last week totaled 49,000 mt, down 5,000 mt WoW, mainly because aluminum prices rose above 25,000 yuan/mt again, causing downstream players to adopt a wait-and-see attitude once more. Meanwhile, aluminum prices pulled back during the week, and downstream players selectively restocked on dips, leading to a slight rebound in warehouse withdrawals and continued destocking of aluminum billet inventory. However, judging from the current downstream consumption pace, the destocking of aluminum billet social inventory was not driven by a recovery on the demand side, but rather by warehouses prioritizing aluminum ingot storage, resulting in a sharp decrease in aluminum billet warehouse inflows. Currently, aluminum billet operating rates struggle to rise, showing a mild operating trend, while the tight warehousing capacity situation has not eased. The operating logic of aluminum billet inventory remains unchanged, continuing the destocking pace. Aluminum billet inventory is expected to pull back to 250,000 mt by month-end. Going forward, attention should be paid to pre-holiday stockpiling and changes in downstream buying sentiment driven by aluminum price fluctuations.

Aluminum prices showed a weak pullback trend during the week, and aluminum billet processing fees barely recovered to above parity, with very limited rebound momentum. By region, processing fees in Foshan were quoted at 170/200 yuan/mt, up 210 yuan/mt WoW; Wuxi was quoted at 80/180 yuan/mt, up 130/100 yuan/mt WoW; Nanchang was quoted at 60/110 yuan/mt, up 210 yuan/mt WoW. Spot order market transactions recovered slightly during the week, with buying sentiment recovering, but the pre-holiday stockpiling pace was not evident, and the improvement in trading was limited. Processing fees are expected to trade within a range next week, with attention needed on the downstream pre-holiday stockpiling pace.