Aluminium billet inventory falls to 130,000mt, warehouse withdrawals rebound, processing fees soften

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According to SMM statistics, on July 2, aluminium billet inventory in major domestic consumption areas fell to 130,000 tonnes, down 4,000 tonnes from last Monday and 10,000 tonnes from last Thursday, with the pace of destocking visibly accelerating. On a year-over-year basis, it was down 23,500 tonnes from the same period in 2025 and 9,700 tonnes from 2024, pushing total inventory to the lowest level for the same period in nearly three years.

In terms of warehouse withdrawals, aluminium billet withdrawals totalled 45,300 tonnes from June 23 to June 29, up 6,500 tonnes W-o-W, ending the four-week pullback trend, while market trading activity improved marginally. This week, current aluminium billet inventory fell to the 130,000 tonnes mark, with inventories in Foshan, Wuxi, and Nanchang all continuing destocking. Nanchang destocked by 2,000 tonnes, posting the most significant decline.

The earlier logic of supply-demand pattern improvement continued to materialise, and inventory entered a sustained destocking trend. Given that current inventory is already at a low for the same period and warehouse withdrawals are stabilising and rebounding, aluminium billet inventory is expected to pull back further to around 125,000 tonnes next week, but attention should be paid to whether downstream consumption strength can sustain.

This week, the centre of aluminium prices continued to move lower. SMM A00 spot aluminium price fell from RMB 22,850 per tonne last Thursday to RMB 22,540 per tonne, a cumulative decline of about RMB 310 per tonne.

Against the backdrop of persistently weakening aluminium prices, processing fees performed divergently across regions, overall fluctuating at highs. By region, in Foshan, φ90 aluminium billet processing fee was RMB 600 per tonne and φ120 was RMB 550 per tonne, each down RMB 50 per tonne from last Thursday.

In Wuxi, φ90 was RMB 700 per tonne, flat with last Thursday, and φ120 was RMB 480 per tonne, down RMB 120 per tonne from last Thursday. In Nanchang, φ90 was RMB 700 per tonne and φ120 was RMB 650 per tonne, flat with last Thursday. From the transaction structure perspective, after the sharp decline in aluminium prices, sentiment for restocking by end-users recovered somewhat. Aluminium billet producers reported marginal improvement in end-use consumption, but transactions were mainly concentrated in long-term contract orders involving direct shipments from upstream and weekly or monthly average prices.

Meanwhile, in the warehouse spot order market, as processing fees continued to fluctuate at highs, purchase costs for end-users were relatively high, and spot order trading sentiment was rather sluggish. As high-priced aluminium billet supply curbed sporadic purchases, some end-users turned to purchasing aluminium ingots to produce billets on their own, partially substituting the need for externally purchased aluminium billets.

The overall market exhibited a divergent pattern of "active long-term contracts and sluggish spot orders." Next week, aluminium billet processing fees are expected to consolidate in a high range, with attention needed to whether aluminium prices can stabilise and spot order market sentiment recovers.