According to SMM statistics, on December 25, the inventory of aluminium billets in mainstream domestic consumer areas stood at 124,500 tonnes, an increase of 1,500 tonnes from Monday's inventory and an increase of 5,000 tonnes from Thursday's inventory. According to SMM statistics, during the period from December 15 to December 21, the total warehouse withdrawals of domestic aluminium billets amounted to 45,900 tonnes, an increase of 2,700 tonnes from the previous week.
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During the week, due to the recovery of transportation capacity in Xinjiang, warehouse arrivals increased significantly, leading to a slight inventory buildup. By region, due to the cycle and sequence of railway transportation, the aluminium billet inventories in Wuxi and Nanchang increased first, while no significant increase in inventory was observed in the Foshan area.
However, the current price spread in processing fees between the east China and south China markets is RMB 200-300 per tonne, and subsequent logistics directions for aluminium billets will prioritise shipments to the south China region. On the consumption side, amid weakening year-end consumption and the suppression of persistently high aluminium prices, market transactions are transitioning to weakness. Additionally, with renewed pressure from the supply side, processing fees in some regions are under significant pressure.
SMM expects that with continuous shipments from the Xinjiang region, aluminium billets will continue to arrive and exert sustained pressure on the supply side. Meanwhile, due to insufficient year-end consumption expectations on the demand side, the market will experience a significant oversupply, and aluminium billets will maintain a phased inventory buildup pace, with inventories expected to range between 120,000-140,000 tonnes next week.
This week, the centre of aluminium prices rose again, operating above the monthly average price. Coupled with the impact of inventory buildup, the aluminium billet processing fees in Wuxi and Nanchang came under significant pressure during the week, while the inventory of aluminium billets in the south China region remained at historically low levels, less than 20kt, with local processing fees remaining firm.
The processing fee in the Foshan area was reported at RMB 380/430 per tonne, a decrease of RMB 20 per tonne W-o-W; in the Wuxi area, it was RMB 150/230 per tonne, a decrease of RMB 100/150 per tonne; and in the Nanchang area, it was RMB 90/140 per tonne, a decrease of RMB 110 per tonne. SMM expects that with continuous shipments from the Xinjiang region, aluminium billets will continue to arrive and exert sustained pressure on the supply side.
Meanwhile, due to insufficient year-end consumption expectations on the demand side, the market will experience a significant oversupply. It is expected that processing fees will remain under pressure next week, but caution is also warranted regarding the rebound impact of aluminium price pullback risks on aluminium billet 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.
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