Alumina Prices Plunge; February Aluminum Costs May Pull Back by Nearly 2,500 Yuan/mt [SMM Analysis]

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SMM, January 27:

According to SMM data, the average tax-inclusive full cost of China's aluminum industry in January 2025 was 19,989 yuan/mt, down 5.3% MoM and up 22.7% YoY, mainly due to the sharp pullback in spot alumina prices during the period. The average spot price of SMM A00 aluminum in January 2025 was approximately 19,970 yuan/mt (December 26, 2024–January 24, 2025). The domestic aluminum industry recorded an average loss of about 19 yuan/mt, with the loss narrowing by 892 yuan/mt MoM, and the industry overall was close to the break-even point.

As of the end of January 2025, the operating capacity of domestic aluminum reached 43.515 million mt. The highest full cost in the industry was approximately 23,372 yuan/mt. Based on the monthly average price, 45.4% of the domestic aluminum operating capacity was profitable in January, while the full cost of nearly 23.74 million mt of capacity remained higher than the monthly average price of SMM A00 aluminum, accounting for 54.6%, down 16.4 percentage points MoM.

From the cost distribution range of aluminum capacity:

In January, the full cost of aluminum decreased by 1,125 yuan/mt MoM, and the overall cost distribution range pulled back further. In December 2024, the lowest full cost of aluminum was approximately 15,724 yuan/mt, and the highest was approximately 24,092 yuan/mt. In January 2025, the lowest full cost was approximately 15,936 yuan/mt, and the highest was approximately 23,372 yuan/mt. The capacity distribution was as follows:

In January, the proportion of domestic aluminum capacity with a full cost below 18,000 yuan/mt was 3.1%;

The proportion of capacity with a full cost in the range of 18,001–19,000 yuan/mt was 29.1%;

The proportion of capacity with a full cost in the range of 19,001–20,000 yuan/mt was 14.%;

The proportion of capacity with a full cost in the range of 20,001–21,000 yuan/mt was 30.3%;

The proportion of capacity with a full cost in the range of 21,001–22,000 yuan/mt was 16.0%;

The proportion of capacity with a full cost exceeding 22,001 yuan/mt was 7.6%.

The proportion of aluminum capacity with a full cost above 20,000 yuan/mt was 53.8%, down 23.4 percentage points MoM.

From the cost breakdown:

On the alumina raw material side, according to SMM data, the national average price of alumina in January 2025 (December 26, 2024–January 24, 2025) was 5,090 yuan/mt, pulling back by 657 yuan/mt compared to December. The weighted average cost of alumina in the domestic aluminum industry decreased by 10.9% MoM in January. From mid-to-late January, spot alumina prices accelerated their decline, with the drop far exceeding previous expectations. By the end of January, spot alumina prices in north China had fallen below 4,000 yuan/mt, while prices in south China were also gradually approaching the 4,000 yuan/mt threshold. The average monthly price of alumina in February is expected to drop by more than 1,000 yuan/mt MoM, significantly reducing aluminum costs.

For auxiliary materials, the procurement price of prebaked anodes slightly increased in January, while aluminum fluoride prices declined due to the drop in aluminum hydroxide prices. In February, the procurement price of prebaked anodes is expected to maintain its upward trend, while aluminum fluoride prices are expected to decline further as aluminum hydroxide prices continue to fall.

Regarding electricity prices, the national average electricity price remained basically stable in January, and the power cost of aluminum is also expected to remain stable in February.

In February 2025, the average monthly price of spot alumina is expected to drop significantly, leading to a substantial reduction in aluminum costs. Power costs are expected to remain stable, while auxiliary material costs will show mixed changes. Overall, SMM expects the average tax-inclusive full cost of the domestic aluminum industry in February 2025 to be around 17,200–17,800 yuan/mt.

Data Source: SMM Click on the SMM Industry Database for More Information

(Mingxin Guo 021-51595800)