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Initial Signs of Pressure on Aluminum Billet Inventory, Processing Fees Fluctuate Downward During the Week [SMM Aluminum Billet Weekly Review]
Dec 26, 2024, at 4:23 pm
SMM, December 26:
Processing fees: Aluminum prices continued to face downward pressure, with aluminum billet processing fees fluctuating downward. Although aluminum billet manufacturers have reduced production, the weakening downstream rigid demand has led to a weak supply and demand situation, causing aluminum billet prices to barely hold steady, with market transactions remaining sluggish. According to SMM statistics, as of December 23, domestic aluminum billet social inventory stood at 99,000 mt, up significantly by 9,900 mt WoW, approaching the 100,000 mt inventory threshold again, alleviating the previously tight supply of aluminum billets. Regarding outflows from warehouses, last week, aluminum billet outflows from warehouses dropped sharply by 8,300 mt WoW to 39,300 mt.
SMM December 26 News: Regarding aluminum billet inventory, a preliminary turning point was observed over the weekend in both aluminum billet inventory and outflows from warehouses, aligning with the expected downstream consumption under basic load conditions. According to SMM statistics, as of December 26, domestic aluminum billet social inventory stood at 103,000 mt, marking a significant inventory buildup of 12,900 mt WoW, returning to the 100,000 mt inventory threshold. The previously tight supply of aluminum billets has been noticeably alleviated. On the outflow side, last week’s aluminum billet outflows from warehouses sharply decreased by 8,300 mt WoW to 39,300 mt. Due to a significant increase in shipments in transit from north-west China, including Xinjiang and Ningxia, concentrated arrivals occurred this week, leading to an inventory buildup. Although some downstream sectors had shown intentions for year-end restocking at lower prices earlier, weak downstream operating rates, combined with the impact of high processing fees, have weighed on aluminum billet outflows.
In terms of processing fees, recent macro factors have been bearish, and the fundamentals have been affected by the off-season in consumption, leading to pessimistic market expectations. Aluminum prices remain under pressure and continue to adjust, while aluminum billet processing fees fluctuate downward within a range. Although aluminum billet producers have reduced production, weak downstream rigid demand has resulted in a supply and demand stalemate, with aluminum billet prices barely holding up and market transactions remaining sluggish. By region, aluminum billet shipments in Foshan declined significantly this week. Due to price spread factors, arrivals in the region continued, leading to increased warehouse inventory. Downstream purchases were mainly driven by rigid demand, with processing fees for φ120 aluminum billets at 420 yuan/mt, down 10 yuan/mt WoW. In Wuxi, the off-season impact on downstream demand was most pronounced, resulting in a supply surplus and poor market transactions for aluminum billets. Processing fees dropped sharply, with φ120 aluminum billet processing fees at 380 yuan/mt, down 70 yuan/mt WoW. In Nanchang, warehouse supply remained tight, downstream buying sentiment was moderate, and suppliers stood firm on quotes. Processing fees for φ120 aluminum billets were 450 yuan/mt, down 20 yuan/mt WoW.
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