Aluminum cost fell 1.7% MoM in July，Some aluminum smelters reported a slight increase in electricity fees in August【SMM Analysis】

According to SMM data, the average tax-inclusive full cost of China's aluminum industry in July 2025 was 16,261 yuan/mt, down 1.7% MoM and 5.8% YoY. During the period, alumina prices were boosted by macro policies such as "anti-rat race" competition, but due to the low absolute price at the beginning of July, the monthly average alumina price in July fell MoM, and its cost-supporting effect became evident in August.

SMM data showed that the monthly average SMM alumina index in July was 3,157.76 yuan/mt (June 26 - July 25), and the weighted average cost of alumina in China's aluminum industry fell 2.8% MoM in July. The average spot price of SMM A00 aluminum was approximately 20,725 yuan/mt (June 26 - July 25), and the average profit of China's aluminum industry was approximately 4,464 yuan/mt.

As of the end of July 2025, China's operating aluminum capacity reached 43.89 million mt, with the lowest full cost of aluminum at approximately 13,591 yuan/mt and the highest at approximately 19,301 yuan/mt. If the industry uses monthly average prices for calculation, 100% of China's operating aluminum capacity was profitable in July.

Cost breakdown:

On the alumina raw material side, SMM data showed that the monthly average SMM alumina index in July was 3,157.76 yuan/mt (June 26 - July 25), and the weighted average cost of alumina in China's aluminum industry fell 2.8% MoM in July. Despite the strengthening of alumina futures due to macro policy news such as "anti-rat race" competition and "capacity reduction," with the most-traded contract rising to a high of 3,577 yuan/mt within the month, the futures-spot arbitrage window opened, prompting futures-spot traders to actively inquire and purchase, tightening spot supply. Sellers refused to budge on prices, and alumina spot prices followed suit. However, due to the low absolute price at the beginning of July, the monthly average alumina price in July fell MoM, and a slight rebound in the average price is expected in August.

In the auxiliary material market, the prebaked anode market was affected by the weak downstream demand in the raw material market in the early period, leading to a weakening of cost support, and prices were weak in July. For aluminum fluoride, under the dual weakness of supply and demand, cost support also weakened, and prices continued to decline in July. Overall, the support of auxiliary materials for aluminum costs weakened. In August, prebaked anode prices are expected to fluctuate relatively little, and the aluminum fluoride market is expected to continue its downward trend. Overall, the auxiliary material market remains weak and is unlikely to provide effective support for aluminum costs in the short term. Regarding electricity prices, they fluctuated rangebound in July, down 0.2% MoM, mainly due to the impact of reduced electricity tariffs during the rainy season as reported by some enterprises in south-west China. Entering August, some enterprises in Sichuan reported an increase in electricity consumption costs due to the impact of high temperatures. Additionally, the state recently issued the "Notice on the Responsibility Weight for Renewable Energy Electricity Consumption and Related Matters for 2025," detailing the proportion of green electricity consumption for aluminum production in various provinces and cities. SMM learned that aluminum smelters across the country have been gradually purchasing green electricity in the past two years, and currently, the supply of green electricity is sufficient. This requirement will not affect aluminum production, but purchasing green electricity or green electricity certificates will increase enterprise costs. SMM will continue to monitor the implementation progress of enterprises.

Entering August 2025, the earlier macro-driven boost to alumina futures and spot markets continued to weaken, with a clear downward trend in the futures market, but relatively firm spot prices. It is expected that the average monthly price of alumina in August will rise slightly. The auxiliary material market remains weak, and this weakness is expected to continue in August. Electricity costs are largely stable. Overall, it is expected that aluminum costs will increase slightly. Taking everything into account, SMM predicts that the average tax-inclusive full cost of the domestic aluminum industry in 2025 will be around 16,200-16,400 yuan/mt.