[SMM Analysis] the main cost composition and medium-term Price trend of Electrolytic Aluminum

From the profit change chart of electrolytic aluminum in SMM weekly report, it can be seen that from the point of view of the complete average cost of aluminum plant, the current aluminum plant will produce an average of one ton of electrolytic aluminum, or will lose 300 to 400 yuan / ton (see SMM weekly for details). The cost of electrolytic aluminum mainly consists of five parts: alumina cost, power cost, prebaked anode cost, aluminum auxiliary material cost and other labor, depreciation and other costs. SMM here a brief analysis of the price trend of several major components of electrolytic aluminum.

Source: SMM

Alumina: from the historical price of SMM website, we can see that since the beginning of June, alumina has dropped from 3078 yuan / ton to 2865 yuan / ton, a decrease of more than 200yuan / ton. And in June, although alumina plants such as Jiao Kou Xinfa and Lingshi Hope have reduced production, at the same time, production projects such as Lu Yu Bochuang and Boxie Shuijiang continue to contribute to production capacity, and at the same time, production capacity of alumina plants is gradually resuming production in the early stage of production reduction or maintenance. Overall, if there is no new substantial production reduction news, alumina will still have 100 to 200 yuan / ton of downward space.

Prebaked anode: the price of prebaked anode stopped falling in June and recovered slightly by nearly 100 yuan compared with May, but the production cost of anode itself is rising. SMM believes that the mainstream price of anode may rise gently and slowly in July.

Electricity price: there are differences in electricity prices in different regions, and the electricity price of self-provided power plants is slightly lower than that of large industrial use. Recently, apart from Xinjiang, we have not heard of the news of electricity price increases in various parts of the country.

Aluminum excipients: aluminum fluoride and cryolite are the main aluminum excipients for electrolytic aluminum. According to SMM, the market price of aluminum fluoride has an upward trend in the near future. SMM quotation is between 9700 and 10000 yuan / ton, up 450 yuan / ton over the previous month. Cryolite price has been relatively stable in recent months, maintaining around 6400 yuan / ton.

To sum up, because alumina is the most important part of the electrolytic aluminum cost (the cost accounts for more than 40%), and the prepared anode and aluminum auxiliary materials account for less than 15% of the electrolytic aluminum cost, therefore, in the long run, the complete average cost of electrolytic aluminum industry still has a small reduction.