Aluminium billet inventory drops to 139,500 tonnes, warehouse withdrawals recover, processing fees under pressure across the board

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Aluminium billet inventory fell to 139,500 tonnes, warehouse withdrawals recovered and processing fees were broadly under pressure. According to SMM statistics, China's aluminium billet inventory in major consumption areas recorded 139,500 tonnes on August 27, down 5,000 tonnes from last Monday and down 3,500 tonnes from last Thursday, ending the previous continuous inventory buildup trend and turning to a slight decline during the week.

Compared with the same period, inventory was 5,500 tonnes higher than in 2025, 29,400 tonnes higher than in 2024, and 69,900 tonnes higher than in 2023, with total inventory still at a high level for the same period in recent years. From the perspective of warehouse withdrawals, aluminium billet withdrawals recorded 36,500 tonnes from August 17 to August 24, up sharply by 6,200 tonnes W-o-W, with market transaction activity markedly recovering, mainly driven by a decline in the aluminium price centre last week, which spurred accelerated downstream procurement.

The slight decline in aluminium billet inventory during the week was driven by two main factors: on one hand, recent warehouse inflows of aluminium billet were low, with the arrival pace slowing across regions, and supply-side inflows fell short of expectations; on the other hand, the downward movement of the aluminium price centre last week stimulated concentrated downstream procurement, leading to a rebound in warehouse withdrawals and a slight destocking of inventory.

Specifically, inventory in the Foshan area fell to 62,500 tonnes due to a significant reduction in weekly arrivals, making it the main force behind the drop in total inventory; the Wuxi area saw a modest inventory buildup to 25,500 tonnes due to increased arrivals. However, the inventory buildup trend for aluminium billet has not reversed.

The operating rate of aluminium billet producers is still gradually rising, with capacity in Yunnan continuing to be released, and the supply side still showing growth. Given the oversupply situation, aluminium billet inventory is expected to shift back to inventory buildup next week. Attention should be paid to downstream procurement sentiment and changes in the operating rate at aluminium billet producers.

This week, the aluminium price centre stopped falling and rebounded. The SMM A00 spot aluminium price rose from RMB 23,600 per tonne last Thursday to a weekly high of RMB 23,920 per tonne, an overall increase of about RMB 320 per tonne from last Thursday. Against the backdrop of the aluminium price recovery, downstream wait-and-see sentiment intensified and market demand weakened somewhat.

Aluminium billet processing fees across regions fell sharply overall, showing a pattern of consolidation and pullback followed by accelerated bottom-fishing during the week. By region, in the Foshan area, processing fees for φ90 aluminium billets were reported at RMB 140 per tonne and for φ120 billets at RMB 90 per tonne, each down RMB 170 per tonne from last Thursday; in the Wuxi area, φ90 billets were at RMB 320 per tonne and φ120 billets at 240 yuan/tonnes, down RMB 240 per tonne and RMB 260 per tonne, respectively, from last Thursday; in the Nanchang area, φ90 billets were at RMB 200 per tonne and φ120 billets at RMB 150 per tonne, down RMB 250 per tonne from last Thursday.

Processing fee trends diverged notably during the week: in the Foshan area, heightened downstream wait-and-see sentiment due to the aluminium price rebound drove a significant decline in processing fees, with φ120 fees dropping to a low of 90 yuan/tonnes; in the Wuxi area, there was initially some sentiment to hold prices firm at the start of the week, but as supply expanded and demand weakened, the decline in processing fees widened noticeably, with φ120 fees down RMB 260 per tonne from last Thursday, leading the decline.

The current oversupply pattern persists, and the operating rates at aluminium billet producers are still gradually climbing, with supply continuing to expand. It is expected that aluminium billet processing fees will remain under pressure at current levels next week, with further downside room. Attention should be paid to regional arrivals and the transmission of aluminium price trends to processing fees.

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.