SHANGHAI, Jul 16 (SMM) – Lower prices of alumina since mid-June improved margins at primary aluminium smelters and narrowed the proportion of aluminium capacity operating under losses to 20.1% in the month to July 15, an SMM survey found.
SMM assessed the average price of alumina across five major consumption areas in China has dipped to 2,582 yuan/mt as of July 15, with a low under the 2,500 yuan/mt level in northern markets.
Falling prices of the feedstock reduced costs at primary aluminium smelters, which averaged 13,105 yuan/mt in the first half of July, down 717 yuan/mt from that in June.
Based on the average price of spot aluminium ingot of 13,739 yuan/mt for the first half of July, SMM assessed that some 29.23 million mt of aluminium capacity was operating with profits, accounting for 79.9% of the total domestic capacity under operation.
The readings compared with profitable capacity of 15.26 million mt, and 41.8%, respectively in June, based on the average prices of spot aluminium ingot at 13,974 yuan/mt.
In the first half of July, aluminium capacity with operating costs of 13,000-13,500 yuan/mt made up a major share of the total capacity, at 26.91%.
SMM expects further downside room in prices of alumina on production resumptions.
