Spot aluminium outflows from warehouses stabilise and rebound; domestic inventory buildup slows significantly over the past week

In late February, domestic aluminium inventory still showed no significant improvement, with inventory buildup remaining on the "fast track." The recent upward trend in aluminium prices has also been somewhat hindered by inventory performance. 

According to SMM data, as of February 24, 2025, the total social inventory of domestic aluminium ingots and billets rose to 1.194 million tonnes, surpassing the key thresholds of 1 million tonnes and 1.1 million tonnes consecutively, and is now approaching the 1.2 million tonnes mark. Specifically, inventory surged 69,000 tonnes W-o-W (up 6.1 per cent), increased by 266,000 tonnes compared to the first day after the holiday (February 5), and accumulated an increase of 479,000 tonnes compared to the pre-holiday baseline (January 27). On a Y-o-Y basis, the inventory buildup in the third week after the holiday ranked among the top in terms of both volume and growth rate over the past seven years.

For aluminium ingot inventory, despite liquidity recovery in the market after the Lantern Festival and a slight increase in aluminium ingot outflows from warehouses over the past week, SMM statistics show that aluminium ingot outflows from warehouses totalled 119,100 tonnes in the past week, up 7,600 tonnes W-o-W; however, domestic aluminium ingot inventory continued its post-holiday buildup momentum. According to SMM data, as of February 24, 2025, the social inventory of domestic aluminium ingots reached 873,000 tonnes, with available inventory climbing to 747,000 tonnes, up 28,000 tonnes from the previous Thursday, showing no signs of slowing in the buildup pace. Notably, on a YoY basis, the inventory increase in the second week after the Chinese New Year exceeded that of the same period last year, with the buildup intensity ranking relatively high over the past seven years. The current inventory buildup slightly exceeded expectations.

SMM analysis suggests that although the current inventory accumulation is slightly above expectations (with inventory already surpassing last year's peak of 865,000 tonnes), the Q1 inventory peak is expected to be around 950,000 tonnes. However, with March approaching, downstream operating rates are expected to rebound steadily under the "Golden March and Silver April" seasonal demand boost, and in-transit cargo volumes in east and central China are already showing a downward trend. SMM predicts that the first destocking period this year is likely to occur in the sixth week after the holiday (around mid-March), similar to previous years. Close monitoring of resumption intensity, the release of in-transit cargoes, and the fulfillment of end-user orders will be necessary to adjust the timing and peak level of the inventory turning point.