China’s aluminium ingot inventories nosedive 81,000 W-o-W despite lower downstream demand

As it was predicted by the Shanghai Metals Market last week, China’s social inventories of aluminium ingot tanked by a massive 81,000 tonnes week-on-week across the eight major consumption areas, including SHFE warrants, to halt at 706,000 tonnes as of Thursday, May 18. It is a good sign that the inventories are following a downward trajectory and it is being claimed it could fall below 700,000 tonnes soon.

The previous week, we witnessed a decline of 48,000 tonnes, but compared to the previous year, the aluminium ingot inventories plunged by 259,000 tonnes. Having a glance at the incoming shipments and those which are already in transit, SMM claims there’s a probability the downward trend will prevail. But we should also consider the rising ratio of non-ingot output can overshadow the relevance of aluminium ingot inventories. According to SMM, downstream demand was comparatively low.

If we consider Monday, May 15, the aluminium ingot inventories rested at 740,000 tonnes, which slumped 34,000 tonnes by Thursday, the same week.

The chart below shows how the inventories have dipped in eight central provinces of China:

The highest inventory downfall was recorded in Wuxi where it dived by 39,000 tonnes, officially closing at 173,000 tonnes. Gongyi witnessed a 19,000 tonnes descend, resting at 154,000 tonnes, whereas Nanhai marked a drop of 15,000 tonnes halting at 168,000 tonnes. In Chongqing, the social aluminium inventories fell by 4,000 tonne settling down at 9,000 tonnes. Shanghai experienced a fall of 2,000 tonnes, closing at 51,000 tonnes.

Both in Hangzhou and Linyi, the social aluminium ingot inventories tumbled by 1,000 tonnes, resting at 57,000 tonnes and 24,000 tonnes. Only, in Tianjin there was no notable change with the inventories remaining stuck at 70,000 tonnes.