According to SMM statistics, the domestic social inventory of aluminium billets on Mar 7 was 259,000 mt, down 11,500 mt WoW, and 6,100 mt from Mar 4. The inventory has been falling for two weeks.
With production continuing to resume, downstream companies favoured aluminium billets with relatively low prices for replenishment. The inventory performance and outflow from warehouses in February are significantly better than that of aluminum ingots. After the inventory began to drop in March, billet processing fees rose along with rising aluminum prices. In Guangdong, the prices for large and small billets were 260 and 320 yuan/mt, up 20 and 10 yuan/mt WoW. Prices in Wuxi were 300 and 350 yuan/mt, and prices in Nanchang were 220 and 290 yuan/mt. Will this suppress the downstream willingness to restock? SMM believes that the rising aluminum billets prices will affect the demand. However, in the first traditional peak season, driven by downstream rigid demand, the outflow from warehouses may rise further. It is expected that downstream demand may allow the inventories to continue to fall. SMM will pay close attention to the recovery of downstream consumption and the sustainability of destocking.
