Approaching the Dry Season, Power Costs Rise, Weighted Average Cost of Aluminum Expected to Increase MoM in December

SMM December 1:
According to SMM data, the average tax-inclusive full cost for China's aluminum industry in November 2025 was 16,057 yuan/mt, up 1.1% MoM but down 21% YoY. This was mainly due to a smaller-than-expected drop in the monthly average alumina price during the period, coupled with a significant increase in electricity costs in provinces with a high share of hydropower as the dry season approached, along with rising prebaked anode prices, leading to a MoM increase in total aluminum production costs. The SMM A00 average spot price in November was around 21,457 yuan/mt (October 26–November 25), with the domestic aluminum industry averaging a profit of about 5,400 yuan/mt.

By the end of November 2025, domestic operating aluminum capacity reached 44.23 million mt. The lowest full cost of aluminum was about 13,229 yuan/mt, while the highest full cost was about 18,782 yuan/mt. Based on monthly average prices, 100% of domestic operating aluminum capacity was profitable in November.

Cost breakdown:
Alumina raw material side, SMM data shows the average SMM alumina index in November was 2,856 yuan/mt (October 26–November 25), down 82 yuan/mt MoM. Throughout the month, the alumina market both domestically and internationally continued in surplus, but trading was sluggish, and prices fell less than expected. Entering December, no large-scale production cuts in alumina have been reported, but maintenance news from northern alumina enterprises has become more frequent. The import window for alumina remains open. Domestic alumina fundamentals are expected to remain in surplus in December, with the monthly average price projected to drop slightly MoM, and alumina costs for aluminum enterprises are expected to decline further.

Auxiliary materials side, prebaked anode prices rose in November due to higher costs, while fluoride salt prices fell as cost support weakened following a drop in raw material fluorite prices in late October. Overall, auxiliary material costs for aluminum production increased in November. In December, both prebaked anode and fluoride salt prices are expected to rise, leading to an anticipated increase in auxiliary material costs for aluminum production.

Electricity prices side, as the dry season approaches, electricity prices in provinces with a high proportion of hydropower have increased significantly, raising power costs for aluminum production in November. Entering December, power costs in these provinces are expected to rise further, and aluminum power costs are projected to continue increasing.

Overall, alumina raw material costs for aluminum in December are expected to continue a slight decline, while auxiliary material and power costs are projected to rebound. Among these, the impact from power costs is anticipated to be dominant, and aluminum costs are expected to rise slightly MoM. Overall, SMM forecasts that the average tax-inclusive full cost for the domestic aluminum industry in December 2025 will be around 16,100-16,500 yuan/mt.