On Monday, May 6, the Shanghai Metals Market survey found the social inventories of aluminium ingot in China’s eight major consumption areas totalled 794,000 tonnes after the outflows of 88,400 tonnes, down by 29,400 tonnes week-on-week.
The stocks in warehouses on May 6 were 3,000 tonnes higher compared to the pre-Labour Day holiday, as of April 30. Also, compared to the inventories during the Labour Day holidays in the last three years, the inventories this year post holidays are positioned at a higher level. Last year, after the Labour Day holiday, aluminium ingot inventories were accumulated at 46,000 tonnes, and in 2022, the inventories decreased over the holiday by 18,000 tonnes.
SMM believes the accumulation of aluminium ingots in warehouses is better after the holiday, driven by lower outflows due to limited demand among the downstream sectors.
Primary aluminium inventories across regions
According to SMM, aluminium ingot inventories in east China decreased by 4,000 tonnes compared with pre-holiday, while inventories in Wuxi increased by 8,000 tonnes. The arrivals of stocks in those areas during the five-day holiday were 31,000 tonnes, and the outflows were 23,000 tonnes.
The inventory in south China was relatively stable compared with the pre-holiday period, with inflows of only 9,700 tonnes, demonstrating no obvious impact on the supply of aluminium ingots by the disturbance of billet supplies in Guangxi.
In Gongyi, the inventory dropped by 5,000 tonnes from the pre-holiday level. The reasons for the inventory decline were lower stock arrivals during the holiday and increased outflows for some downstream customers who required delivery during or after the holiday.
According to SMM statistics, China’s social inventories of aluminium billets as of May 6 were 230,000 tonnes, up 12,200 tonnes from April 30 and 72,300 tonnes higher than a year ago. Thus, the inventories stood at the highest level compared to the same period of the past four years.
Aluminium billet inventories
According to SMM, China’s domestic aluminium billet inventories as of May 6 were 230,000 tonnes, reflecting an increase of 12,200 tonnes from the pre-holiday level and a hike of 72,300 tonnes from the corresponding period of the previous year.
The outflow of aluminium billets from warehouses during the holiday was 51,900 tonnes, down by 16,600 tonnes week-on-week.
SMM found the supply disturbance in Guangxi before the holiday had no significant impact on the performance of domestic billet inventories during the holiday.
Outlook for May
SMM predicts that with the transition from the traditional peak season to the off-season, primary aluminium demands will weaken in May, resulting in ingot inventories hovering around 800,000 tonnes in the next one or two weeks. For aluminium billet inventories, SMM projects them to fluctuate in the short term after the holiday, standing above 200,000 tonnes.
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