SMM

Since late November, aluminum prices have remained weak, but the most-traded SHFE aluminum contract has consistently stabilized above the 20,000 yuan mark, providing confidence for market buyers to restock on dips. According to SMM statistics, last week, domestic aluminum ingot outflows from warehouses decreased slightly by 2,000 mt WoW to 130,300 mt. The strong performance of outflows from warehouses, coupled with stable and slightly slowed shipments from Xinjiang, still led to destocking of domestic aluminum ingots in early December. Despite a rebound in aluminum prices in December, the situation of concentrated arrivals remained moderate. As of December 5, 2024, SMM statistics showed domestic aluminum ingot social inventory at 547,000 mt, and domestic circulating aluminum inventory at 421,000 mt, down 6,000 mt WoW. Although the Gongyi area saw an inventory buildup of 9,000 mt due to continuous arrivals from north-west China, the Wuxi area still saw a destocking of 7,000 mt due to limited arrival pressure, and the Foshan area continued stable slight destocking, delaying the year-end overall inventory buildup turning point. On a YoY basis, domestic aluminum ingot inventory decreased by 42,000 mt compared to the same period last year. SMM expects the backlog situation in Xinjiang to continue to ease, with increased shipments to Gongyi and Wuxi anticipated. Caution is needed against the pressure and risks caused by concentrated arrivals. Although low inventory continues to provide short-term support for aluminum prices, excessive optimism is not advisable.