Aluminium billet inventory dropped another 28,500t within the week, processing fees showed a "south strong, east weak" pattern

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According to SMM statistics, as of May 21, aluminium billet inventory across major consumption regions in China totalled 205,500 tonnes, down 28,500 tonnes W-o-W (Thursday), with destocking accelerating. Warehouse withdrawals totalled 55,700 tonnes during May 12-18, an increase of 14,200 tonnes from the previous week. Supply side, warehouse inflows declined notably. On one hand, the impact of earlier production cuts by aluminium billet producers in Xinjiang gradually materialised, with warehouse inflows in Wuxi dropping significantly. On the other hand, production cuts by aluminium billet producers in Guangxi resulted in limited arrivals in South China, and local processing fees recovered slightly. Demand side, performance remained relatively stable. Persistently low processing fees in Wuxi, combined with aluminium price pullbacks, prompted downstream manufacturers to purchase at lower prices. Aluminium billet consumption continued to recover over the past two weeks, driving destocking. Currently, aluminium billet social inventory destocking, primarily driven by supply-side factors, slightly exceeded expectations. With supply-side conditions maintained and demand stable, aluminium billet inventory is expected to sustain the destocking trend, with inventory next week expected to pull back to below 200,000 tonnes.

Within the week, aluminium prices first fell then rose, showing an overall fluctuating trend of moving sideways, with processing fees displaying a pattern of "strong in the south, weak in the east." By region, Foshan processing fees were quoted at RMB 350/400 per tonne, up RMB 170 per tonne W-o-W; Wuxi was quoted at RMB 180/260 per tonne, a rebound of RMB 50/60 per tonne W-o-W; Nanchang was quoted at RMB 190/240 per tonne, up RMB 140 per tonne W-o-W. Wuxi had a relatively high aluminium billet inventory, and producers had the willingness to recover funds, with the market showing a trend of pushing for lower prices to facilitate shipments. In South China, however, arrivals dropped sharply, and the market saw sentiment to hold prices firm, with processing fees relatively moderate. Within the week, absolute prices of aluminium billets in both Wuxi and South China remained mostly in the range of RMB 24,500-24,600 per tonne, with processing fees adjusting in line with fluctuations in aluminium prices. It is expected that as aluminium billet inventory enters a virtuous cycle, market processing fees will gradually recover.

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.