China aluminium billet inventory eases slightly, processing fees rebound as prices fall

According to SMM statistics, as of September 17, aluminium billet inventory in major domestic consumption areas recorded 152,500 tonnes, down 500 tonnes from last Thursday (September 10) and down 5,000 tonnes from this Monday (September 14). The persistent upward trend in inventory since mid-August has shifted slightly, turning into a modest pullback from highs.

On a Y-o-Y basis, inventory was approximately 17,500 tonnes higher than the same period in 2025, about 31,000 tonnes higher than 2024, and roughly 61,000 tonnes higher than 2023, with total inventory still at the highest level for the same period over the past four years. From the perspective of warehouse withdrawals, aluminium billet withdrawals during September 7–September 14 recorded 38,900 tonnes, up 2,800 tonnes W-o-W, ending the previous period's pullback and indicating marginal improvement in market trading activity.

By region, Foshan inventory stood at 75,500 tonnes, down 1,500 tonnes from last Thursday; Wuxi recorded 22,000 tonnes, flat W-o-W; Changzhou at 17,500 tonnes and Nanchang at 11,500 tonnes both saw slight inventory buildup of 500 tonnes each; Huzhou recorded 26,000 tonnes, flat W-o-W.

This round of inventory weakening was driven by both supply and demand factors: Demand side, aluminium prices pulled back from last week's highs, downstream acceptance of high aluminium prices rebounded, and purchase willingness improved marginally, leading to a recovery in warehouse withdrawals and exerting some destocking pressure on inventory.

Supply side, aluminium billet producers in Guangxi began maintenance-related production cuts this week, raising expectations of supply tightening and easing inbound pressure, further supporting the loosening of high inventory levels. Driven by supply-side maintenance cuts and pre-holiday demand stockpiling, aluminium billet inventory destocking momentum is expected to strengthen next week, with inventory likely to continue its modest pullback. Key focus should be on the actual scale of Guangxi maintenance cuts and the pace of Foshan arrivals digestion.

Aluminium prices shot up and retreated during the week, with SMM A00 aluminium spot prices falling from RMB 24,560 per tonne last Thursday (September 10) to RMB 24,180 per tonne this Thursday (September 17), a cumulative decline of approximately RMB 380 per tonne, with the price centre pulling back to around RMB 24,200 per tonnes. The pullback in aluminium prices, combined with supply tightening expectations, drove processing fees across all regions to rebound across the board.

By region, Foshan φ90 aluminium billet processing fees were quoted at RMB 160 per tonne and φ120 at RMB 110 per tonne, both up RMB 210 per tonne from last Thursday, sharply turning positive from negative territory; Wuxi φ90 aluminium billet was quoted at RMB 400 per tonne and φ120 at RMB 300 per tonne, up RMB 170 per tonne and RMB 160 per tonne W-o-W respectively; Nanchang φ90 aluminium billet was quoted at RMB 280 per tonne and φ120 at RMB 200 per tonne, up RMB 260 per tonne and RMB 230 per tonne W-o-W respectively.

The broad-based rebound in processing fees this week was driven by two main factors: First, the downward shift in the aluminium price centre improved downstream acceptance of high aluminium prices, cooled wait-and-see sentiment, significantly improved purchase willingness, and boosted trading activity. Second, supply-side tightening signals emerged as Guangxi aluminium billet producers began maintenance-related production cuts, raising market expectations of future supply tightening.

This repaired the situation where Foshan and Nanchang processing fees had previously fallen into negative territory with producer quotes below cost benchmarks, significantly strengthening producers' willingness to hold prices firm, with processing fees being passively lifted and turning from negative to positive. Notably, despite the sharp rebound in processing fees, Foshan φ90/φ120 and Nanchang φ90/φ120 remain at historically low levels, reflecting that the current supply-demand pattern has not fundamentally reversed and overall supply-side volume pressure persists.

Processing fee trends next week are expected to depend on the intensity of Guangxi maintenance cuts and aluminium price movements. If aluminium prices continue to fluctuate at highs and maintenance cuts fall short of expectations, the room for processing fee rebounds will be limited, with attention needed on downstream restocking intensity and the pace of Foshan arrivals.

Note: This article has been issued by SMM and has been published by AL Circle with its original information without any modifications or edits to the core subject/data.