In July, domestic alumina costs increased by 1.77% MoM, with strong support from mining costs

According to the SMM alumina daily cost model, as of July 31, the weighted average total cost of the domestic alumina industry was 2,867.2 yuan/mt, up 49.7 yuan/mt from the end of June, up 1.77% MoM, and up 7.34% YoY. Among these, ore costs increased by 26.5 yuan/mt from the end of June, and caustic soda costs increased by 25 yuan/mt from the end of June. The detailed analysis is as follows.

Ore side, according to SMM data, both domestic and overseas ore prices slightly increased in July. As of July 31, SMM low-grade bauxite (Shanxi) was quoted at 570 yuan/mt, up 20 yuan/mt from the end of June; low-grade bauxite (Henan) was quoted at 550 yuan/mt, up 10 yuan/mt from the end of June; low-grade bauxite (Guizhou) was quoted at 450 yuan/mt, up 40 yuan/mt from the end of June. The average CIF price of Guinean bauxite was $74/mt, up $1/mt from the end of June, and the average CIF price of Australian bauxite was $62/mt, up $2/mt from the end of June. According to the SMM survey, there has been no further news of production resumption for bauxite in Shanxi and Henan recently.

In south-west China, Guizhou is undergoing inspection work, and the spot supply of bauxite is slightly tight; the bauxite market in Guangxi stabilized. Imported bauxite still mainly relies on long-term contracts, with very limited spot supply.

In recent weeks, the port arrivals of domestic bauxite improved, but the shipment of Guinean bauxite was disrupted again at the end of May, which may slightly affect the port arrivals of bauxite in late July. In recent weeks, the weekly shipment data of Guinean bauxite has shown a downward trend, and the impact of the rainy season on shipments may gradually be reflected. Considering factors such as shipping schedules, the import volume of Guinean bauxite in August may see a slight MoM decline. We need to continue to pay attention on the shipment situation in Guinea.

Caustic soda side, according to the SMM survey, alumina refineries in Shanxi, Henan, and Shandong successively raised the long-term procurement prices of liquid caustic soda in July. Based on calculations, this price increase will raise the average cost of alumina in Shanxi by 38 yuan/mt and in Henan by 38 yuan/mt. According to SMM data, in early July, a large alumina refinery in Shandong raised the ex-factory price of 32% ion membrane caustic soda by 20 yuan/mt to 720 yuan/mt (equivalent to about 2,250 yuan/mt), and on July 16, it was further raised by 15 yuan/mt to 735 yuan/mt (equivalent to about 2,297 yuan/mt).

Thermal coal side, according to SMM data, taking the coal price (5500K) at Qinhuangdao Port as an example, as of July 31, the coal price at Qinhuangdao Port was 865 yuan/mt, stable compared to the end of June.

Overall, compared to June, the procurement price of caustic soda for alumina refineries significantly increased in July, and ore prices continued to rise. The average cost of the alumina industry still has strong medium and long-term support. Continued attention is needed on the price trends and supply stability of domestic and overseas ores.