[Stagflation Expectations Heat Up Combined with China Inventory Buildup, Divergence Between SHFE and LME Aluminum Continues] Overall, geopolitical risks outside China persisted and supply tightened, keeping LME aluminum prices on a relatively strong footing; high inventory levels in China combined with weak demand limited SHFE upside room, with a clear divergence between SHFE and LME price trends.

As of April 24, the mainstream price in the south China market — SMM A00 aluminum (Foshan) was at a discount of 345 yuan/mt against the 2605 contract, while the mainstream price in the east China market — SMM A00 aluminum was at a discount of 130 yuan/mt against the 2605 contract. The price spread between the two regions had exceeded 200 yuan/mt, covering sea freight, short-haul transfer, and logistics costs, officially opening up the transshipment window between Guangdong and Shanghai...

According to SMM data, as of April 24, social inventory of aluminum ingots in China's major consumption regions stood at 1.465 million mt, up 42,000 mt WoW, maintaining an inventory buildup trend for multiple consecutive weeks, with the pace of buildup widening again WoW. Weekly warehouse withdrawals rebounded slightly by 14,200 mt WoW to 115,200 mt, but the improvement in withdrawals fell short of the recent increase in arrivals, indicating clearly insufficient momentum for inventory drawdown..

Entering the second half of March, regional divergence in China’s aluminum market became increasingly pronounced, with the divergence between inventory trends and spot price spreads in east China and south China intensifying. On the one hand, the nationwide post-holiday inventory buildup in aluminum gradually approached its end, inventory overhang pressure in east China continued to ease, circulation efficiency steadily improved, the inventory buildup momentum slowed down significantly, and.....

Before and after the Chinese New Year, the domestic spot aluminum market exhibited significant regional differentiation, with the spot price spread between South China (Foshan) and East China (Wuxi) drawing particular attention. Before the holiday, the Guangdong-Shanghai price spread reached a high of 150 yuan/mt on February 10, while by February 27 after the holiday, this spread had narrowed significantly to 10 yuan/mt.....

In terms of aluminum billet inventory, according to SMM statistics, the domestic aluminum billet inventory in major consumption areas stood at 127,500 mt on June 12, a decrease of 2,000 mt from Monday and a decline of 2,500 mt WoW, still hovering around 130,000 mt. In the past week, the regional distribution of aluminum billet inventory has shown divergence. In the Wuxi area, there was still an increase in warehouse arrivals, but poor market transactions exacerbated the local inventory buildup. In the Nanchang area, due to the persistently high Shanghai-Guangdong price spread, more billets were transported from the billet plants around South China to the Nanchang area, leading to an increase in local inventory, while arrivals in the Guangdong area were relatively low. In terms of outflows from warehouses, the total outflows from public warehouses of aluminum billets in China during the period from June 3 to June 8 amounted to 36,400 mt, a decrease of 1,200 mt from the previous period.

In terms of aluminum billet inventory, according to SMM statistics, as of May 29, the inventory of aluminum billets in major domestic consumption areas reached 128,300 mt, a decrease of 1,900 mt from Monday this week and a decrease of 2,500 mt WoW from Thursday last week. Despite signs of a slowdown in the destocking of aluminum billet inventory, the overall inventory still hovered around 130,000 mt, a low level compared to the same period in the past three years, indicating that inventory levels remained relatively low. From the perspective of outflows from warehouses data, the total outflows from warehouses of domestic aluminum billets during the period from May 20 to May 25 was 44,600 mt, a decrease of 4,900 mt WoW and a decrease of 7,300 mt YoY. Affected by the continuous impact of truck shipments, shipments showed little sign of improvement, indicating a significant weakening in the trading activity of the aluminum billet market and a growing off-season atmosphere. From a regional perspective, there was a gradual increasing trend in the arrival of aluminum billets in the Wuxi area, as manufacturers increased shipments to warehouses due to weakened downstream consumption. Meanwhile, the current Guangdong-Shanghai price spread had widened to 150 yuan/mt, and the price difference of "strong in the east and weak in the south" may promote the flow of aluminum billets between regions. It is necessary to continue to monitor the pace of changes in domestic consumption and the changes in the Guangdong-Shanghai price spread.

As the Lantern Festival approaches, the joy of the New Year fills our hearts. Most traders in the aluminum industry have resumed work this week, and downstream enterprises are expected to enter a peak period of resumption of work and production. Let us take a look at the aluminum inventory performance in the first week after the Chinese New Year: According to SMM statistics, as of February 10, 2025, the total domestic aluminum inventory (aluminum ingot + aluminum billet) tracked by SMM reached 1.0235 million mt, surpassing the 1 million mt mark. This represents an increase of 95,000 mt (10.2%) compared to the first day after the holiday (February 5) and an increase of 308,000 mt compared to pre-holiday levels (January 27). Observing the YoY inventory buildup data for the first week after the Chinese New Year, the increase exceeded last year's 82,000 mt and 9.1% growth. The inventory buildup in the first week after the holiday continued the slightly higher trend observed during the Chinese New Year holiday period...

As the Lantern Festival approaches, the joy of the New Year fills our hearts. Most traders in the aluminum industry have resumed work this week, and downstream enterprises are expected to enter a peak period of resumption of work and production. Let us take a look at the aluminum inventory performance in the first week after the Chinese New Year: According to SMM statistics, as of February 10, 2025, the total domestic aluminum inventory (aluminum ingot + aluminum billet) tracked by SMM reached 1.0235 million mt, surpassing the 1 million mt mark. This represents an increase of 95,000 mt (10.2%) compared to the first day after the holiday (February 5) and an increase of 308,000 mt compared to the pre-holiday level (January 27). Observing the YoY data for inventory buildup in the first week after the Chinese New Year, the increase exceeded last year's 82,000 mt and 9.1% growth. The inventory buildup in the first week after the holiday continued the slightly higher trend observed during the Chinese New Year holiday period...

After the eight-day national statutory Chinese New Year holiday, let's focus on the aluminum inventory performance freshly released on the first day after the holiday: According to SMM statistics, as of February 5, 2025, the total domestic aluminum inventory (aluminum ingots + aluminum billets) tracked by SMM reached 929,000 mt, an increase of 213,000 mt (29.8%) compared to pre-holiday levels (January 27), which aligns overall with expectations. On a YoY basis, the increase and growth rate (211,000 mt and 30.6%, respectively) showed relatively small differences compared to the same period last year, with no anomalies observed. Over the past seven years, the average post-Chinese New Year inventory buildup in domestic aluminum has been 210,000 mt, with an average growth rate of 24.2%. From this perspective, this year's aluminum inventory buildup is slightly higher, primarily due to...