Electricity Prices and Alumina Prices Both Declined, Aluminum Costs in February Pulled Back Significantly by Nearly 3,500 Yuan/mt [SMM Analysis]

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SMM, February 28:

According to SMM data, the average tax-inclusive full cost of China's aluminum industry in February 2025 was 16,909 yuan/mt, down 15.4% MoM and up 2.5% YoY, mainly due to the sharp pullback in spot alumina prices during the period. The average SMM alumina index price in February was 3,490.5 yuan/mt (January 27-February 25), down approximately 1,600 yuan/mt from the previous month's average. The average SMM A00 spot price in February 2025 was approximately 20,484 yuan/mt (January 27-February 25), with the domestic aluminum industry's average profit reaching about 3,575 yuan/mt, marking a shift to a significantly profitable state.

As of the end of February 2025, the domestic operating capacity of aluminum reached 43.64 million mt, with the industry's highest full cost dropping to 20,125 yuan/mt. Based on monthly average price calculations, 100% of the domestic aluminum operating capacity was profitable in February.

From the cost distribution range of aluminum capacity:

The overall full cost distribution range of aluminum saw a significant pullback in February. In January 2025, the lowest full cost of aluminum was approximately 15,936 yuan/mt, and the highest was about 23,372 yuan/mt, while in February, the lowest full cost was approximately 13,724 yuan/mt, and the highest was about 20,125 yuan/mt. The capacity distribution is as follows:

In February, the proportion of domestic aluminum capacity with a full cost below 15,000 yuan/mt was 1.5%;

The proportion of capacity with a full cost in the range of 15,001-16,000 yuan/mt was 27.8%;

The proportion of capacity with a full cost in the range of 16,001-17,000 yuan/mt was 18.2%;

The proportion of capacity with a full cost in the range of 17,001-18,000 yuan/mt was 33.9%;

The proportion of capacity with a full cost in the range of 18,001-19,000 yuan/mt was 12.7%;

The proportion of capacity with a full cost exceeding 19,001 yuan/mt was 5.8%.

From the perspective of cost breakdown:

On the alumina raw material side, according to SMM data, the national average SMM alumina price in February 2025 (January 27-February 24) was 3,490.5 yuan/mt, down 1,600 yuan/mt from January. The weighted average alumina cost in the aluminum industry decreased by 30.6% MoM, with its proportion in aluminum costs dropping by 8.9 percentage points to 40.8%. By the end of February, spot alumina prices stabilized after the decline, and buyers and sellers entered a phase of negotiation. Spot prices showed no clear directional trend, and short-term prices may enter a phase of fluctuation and adjustment. However, with the subsequent commissioning of new alumina capacity, spot alumina prices are expected to remain under pressure in the medium and long term. As current alumina prices are lower than at the beginning of February, the average monthly alumina price in March may decrease slightly MoM, and the alumina cost for aluminum production is expected to decline slightly again.

For auxiliary materials, the procurement price of prebaked anodes increased slightly in February. Due to the significant drop in aluminum hydroxide prices, aluminum fluoride prices pulled back. Overall, the cost of auxiliary materials increased slightly. Entering March, the procurement price of prebaked anodes is expected to rise by 956 yuan/mt MoM, while aluminum fluoride prices may decline further. Overall, the cost of auxiliary materials is expected to increase significantly.

On the electricity price side, due to the decline in coal prices, thermal power prices fell, leading to a decrease in the national average electricity price in February. The power cost for aluminum production dropped by 1.1% MoM. Entering March, electricity prices may continue to decline slightly, and the power cost for aluminum production is expected to maintain a slight downward trend.

In March 2025, the average monthly alumina price may show a slight decline; auxiliary material costs may increase significantly; and power costs may decline slightly. Overall, the cost of aluminum production is expected to rebound slightly. SMM estimates that the average tax-inclusive full cost of the domestic aluminum industry in March 2025 will be around 16,900-17,300 yuan/mt.

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

(Mingxin Guo 021-51595800)