SMM August 11 News:
In July 2026, the national weighted average full cost of alumina production stood at Rmb 2,718/mt, up Rmb 37/mt month-on-month, while the weighted average cash cost came in at Rmb 2,544/mt. The notable cost rebound was primarily driven by firmer bauxite prices, with rising CIF costs for imported ore and persistently tight domestic supply jointly lifting the feedstock side. Caustic soda costs showed regional divergence—stable in the north and softer in the south—which limited their overall impact. Meanwhile, a modest decline in energy costs during the month partially offset the upward pressure.
Bauxite:
Imported bauxite prices sustained their upward trend in July, serving as the core driver behind the cost surge. Elevated ocean freight rates, coupled with the approaching rainy season in Guinea that reduced shipments and lifted arrival costs, pushed import quotes markedly higher, passively raising alumina refineries' procurement costs. On the domestic front, lingering after-effects from previous mining accidents kept mine resumption slow, with supply remaining tight. Some alumina producers have been forced to adjust production schedules in response. Domestic ore prices in July surpassed June levels. With buyer-seller negotiations intensifying, alumina plants attempted to cap prices, yet strong supply-side support kept bauxite prices broadly inclined upward. Looking ahead to August, no clear timeline has emerged for domestic supply recovery, while imported ore shipments are expected to shrink further amid the rainy season. Bauxite prices are likely to hold high and steady, with import quotes potentially edging slightly higher.
Caustic Soda:
The domestic caustic soda market held largely stable in July, with regional divergence. In northern regions (Shandong, Shanxi, etc.), prices fluctuated little and long-term contract prices saw no notable adjustments. In southern regions (Guangxi, etc.), prices were cut by approximately Rmb 100/mt, with most producers keeping prices at relatively low levels to sharpen regional cost competitiveness. Overall, the caustic soda segment had limited impact on alumina production costs. Entering August, Shanxi's caustic soda long-term contract prices are expected to rise by Rmb 50/mt, nudging local costs slightly higher but with limited effect on the broader alumina sector. In Guangxi, prices are set to decline further by Rmb 150/mt, placing local caustic soda costs at the lower end of the industry spectrum and widening the region's cost advantage.
Outlook:
To sum up, July's alumina production costs rose notably, led by stronger bauxite prices, while a modest dip in energy costs provided some buffer. Looking to August, the domestic ore supply shortage is unlikely to improve, and imported ore shipments are expected to decrease amid the rainy season, with quotes possibly climbing further. Bauxite prices are seen holding firm at high levels. Caustic soda costs are projected to show regional divergence—ticking up mildly in the north while declining further in the south—with overall narrow fluctuations. The national weighted average full cost of alumina production for August is expected to run in the range of Rmb 2,700–2,820/mt, with the weighted average cash cost projected at Rmb 2,530–2,650/mt.
