Aluminium Ingot demand across Asia remained weak in late June, with China seeing inventory accumulation in some regions due to sluggish downstream consumption and sufficient supplies. In Japan, steady prices masked a bearish sentiment driven by a prolonged demand slump, rising port inventories, and reduced Q3 premiums.
Aluminium Ingot market fundamentals across Asia continued to reflect a delicate balance between supply and demand in late June. While China grappled with mixed inventory movements and weak downstream consumption amid seasonal headwinds, Japan's market remained subdued, shaped by persistent demand weakness and broader oversupply concerns. Together, these regional dynamics are shaping a cautious short-term outlook, with price and inventory trends hinging on how downstream sectors and trade policies evolve in the coming weeks.
China
The dynamics of China's Aluminium Ingot inventory shifted by late June. While the combined stock in Guangdong (149,000 mt), Wuxi (102,000 mt), and Gongyi (63,000 mt) fell by 2.1% week-on-week to 318,000 mt by June 27, other consuming regions saw an accumulation of Aluminium Ingot. This buildup was a result of increased production capacity in some regions coupled with subdued consumption and limited warehouse outflows, a trend that intensified over the weekend in major consumption hubs due to concentrated arrivals.
Despite a slight uptick in the production of Aluminium Ingot due to increased operational capacity, the market faced a challenging demand landscape. Weak off-season consumption in key areas like building profiles and home appliances, coupled with a decline in the photovoltaic market, overshadowed any positive impact from new energy vehicle demand.
The viewpoint for domestic Aluminium Ingot inventory in the first half of July points to stability with a potential slight increase. This is primarily driven by expected elevated casting ingot production in certain provinces and ongoing arrivals, counteracted by weak downstream consumption and sluggish cargo collection.
Japan
Despite Aluminium Ingot prices in Japan holding steady this week, the market remains bearish. This was primarily due to weak domestic demand over the past year, a trend that predates the recent US tariff increase. While Japan has seen minimal direct impact from the US doubling aluminum import tariffs to 50% (effective June 4), buyers are concerned about potential drops in demand from automakers. Japan is currently negotiating with the US to exempt its carmakers from a 25% auto tariff and to avoid a 24% "reciprocal" tariff set to begin July 9.
Third-quarter premiums for Aluminium Ingot in Japan have been settled at $108 per tonne, a substantial decrease from $182 per tonne in the second quarter. This reduction is a direct result of several factors impacting the Aluminium Ingot market: subdued domestic demand in Japan, rising inventories at Japanese ports, and a broader market oversupply.
Looking ahead, Japanese market participants foresee a reduction in Aluminium Ingot inventories next quarter. This could drive premiums higher and contribute to a tighter Asian supply picture.
