According to SMM statistics, as of March 5, aluminium billet inventory in China’s major domestic consumption hubs totalled 398,000 tonnes. Inventory first increased and then declined, still hovering around 400,000 tonnes. Across the major consumption hubs, regional divergence persisted. Foshan continued to see an inventory buildup, with aluminium billet inventory up 12,500 tonnes WoW to 171,500 tonnes. The pace of inventory buildup slowed slightly, but local warehousing capacity was nearing saturation, and some warehouses announced a suspension of warehouse inflows, leaving part of the locally backlogged inventory unable to be reflected. Wuxi inventory fell 4,000 tonnes WoW to 142,000 tonnes, while Nanchang inventory fell 2,000 tonnes W-o-W to 13,500 tonnes. Although inventories in both regions edged down, Wuxi should pay attention to shipment conditions for Xinjiang aluminium billet, while Nanchang was affected by maintenance-related production cuts at aluminium billet producers in Qinghai in February, resulting in relatively limited warehouse inflows. Although inventories showed slight signs of easing during the week, an inflection point has yet to be established. On the one hand, aluminium billet producers are set to resume production in March, leaving the supply side still under heavy pressure; on the other hand, after the holiday, the resumption pace at downstream traditional extrusion plants remained limited, and acceptance of the current wildly swinging yet persistently high aluminium prices was still only average, with a recovery in rigid demand needing end-user orders to gain momentum. Given the current supply-demand imbalance, aluminium billet inventory in March is expected to remain within 350,000-450,000 tonnes, and the market needs to watch whether an inventory inflection point can formally take shape.

After the Lantern Festival, downstream extrusion plants resumed operations in a concentrated manner. However, amid a steady stream of overseas news and volatile aluminium prices, downstream purchasing strength was relatively average, keeping aluminium billet processing fees under sustained pressure. In some regions, discounts even emerged and widened, underscoring broad market weakness. By region, Foshan processing fees were quoted at -100/-50, down RMB 210 per tonne W-o-W; Wuxi at RMB -100/-50 per tonne, down RMB 180 per tonne WoW; and Nanchang at RMB 0/50 per tonne, down RMB 150 per tonne W-o-W. The market is still in a phase of high inventory plus weak demand. With fluctuations in aluminium prices, the processing fee structure appears somewhat disordered, with a clear price spread between high and low levels. Aluminium billet processing fees are expected to remain under pressure next week. 

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. 

Image source: The image has been generated by AI for referential purposes only.