Off-season in China’s manufacturing sectors results in low pick-up from aluminium billet warehouses

According to the Shanghai Metals Market survey, aluminium billet inventories in China stood at 162,800 tonnes on Thursday, June 13, indicating a week-on-week decline of 3,600 tonnes. But on a year-on-year basis, the inventories rose 21,300 tonnes, standing at a high level for the same period in nearly four years.

Pick up and supply

The year-on-year increase in aluminium billet inventories could be attributed to reduced pick-up from warehouses by 6,700 tonnes to 45,200 tonnes, dropping to the lowest level in nearly four years.

Due to weak purchase sentiment across China, there is a very little room for improvement in aluminium billet pick-up from warehouses. SMM believes aluminium billet inventories will remain steady in the near future amid weak downstream demand and potential supplies.

Traditionally, Chinese end-user sectors (including building & construction and auto manufacturers) have entered the off-season in June and therefore, lowered their operating rates, resulting in an order decrease and pullback in demand.

At the end of June, domestic aluminium billet inventory will likely hover around 150,000-200,000 tonnes.

On the supply side, aluminium billet production across China stood at 1.457 million tonnes in May 2024, up 40,000 tonnes or 2.8 per cent Y-o-Y or down by 15,000 tonnes or 1 per cent M-o-M.

 Aluminium ingot inventory

SMM data showed the total inventory of aluminium ingots stood at 781,000 tonnes, up 3,000 tonnes W-o-W but 260,000 tonnes higher Y-o-Y.

With the downfall in domestic spot aluminium prices from their highs in the beginning of June, pick-up from warehouses increased significantly by 20,600 tonnes W-o-W to 118,300 tonnes.