Chinese aluminum smelters’ profit margins shrink

As of December 7, China's aluminum spot full cost rose to 16,285 yuan/mt, up 44 yuan/mt WoW. During the week, the weak spot price of aluminum led to a continuous squeeze on immediate profit margins. As of December 7, the domestic spot price of aluminum was about 18,480 yuan/mt, offering an average immediate profit of roughly 2,195 yuan/mt, a drop of 194 yuan/mt WoW.

In the near term, the raw and auxiliary materials market is expected to stay weak, while significant decreases in electricity costs are unlikely. Thus, the cost of domestic aluminum in China is forecasted to fluctuate within a narrow range. A notable disparity in electricity supply exists between northern and southern aluminum smelters, leading to distinct cost differences. Northern aluminum smelters are likely to have a cost advantage.