A week ago, as of March 18, China’s domestic social inventories of aluminium ingot stood at 847,000 tonnes, of which the amount for sale was 721,000 tonnes, found the Shanghai Metals Market survey.
Over the weekend, inventories grew by 4,000 tonnes and stood 356,000 tonnes higher than the pre-holiday level. But despite the recent uptrend, inventories stayed at a low level for the same period of the past seven years. Nevertheless, inventories advanced towards 850,000 tonnes, as predicted before the holiday.
According to SMM data, the outflow of aluminium ingots from warehouses in the fourth week after the holiday was 109,000 tonnes, down by 6,900 tonnes W-o-W, contributing primarily to the rise in inventories. One of the primary reasons behind the decreased outflow from warehouses was the lower volume of railway cargo in transit.
However, the overall aluminium ingot outflow from warehouses remained stable till the second week of March 2024 to meet the growing downstream demand, given that fresh primary metal production has taken a back seat due to the ongoing dry season. SMM believes that the rise in aluminium ingot inventories last week was intermittent and would drop in the short term.
SMM further explained that primary aluminium production resumption in Yunnan would occur soon; thus, its effect on the inventory would only be seen after April 2024.
On the same day, SMM reported aluminium billet inventories at 249,700 tonnes, down by 8,500 tonnes week-on-week. Inventories fell despite the lower outflow of billets from warehouses. Due to the significant decline in the arrivals of aluminium billets, the pace of domestic billet destocking continued and accelerated during the week.
According to SMM data, the outflow of aluminium billets from warehouses in the fourth week after the holiday was 50,200 tonnes, down by 5,700 tonnes from the earlier week.
The stocks that inventories held last week were primarily due to the inflow of imported goods until early March when the import window opened. SMM predicted that domestic aluminium inventories would remain stable in the second half of March before the inflection point of destocking would occur. The inflection point of aluminium ingot inventories is expected to be this week.
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