SMM, August 11:
In July 2026, the weighted average full cost of alumina in China was 2,718 yuan/mt, up 37 yuan/mt MoM, with the weighted average cash cost at 2,544 yuan/mt. The notable cost increase was primarily driven by the sharp rise in bauxite prices, as higher landed costs for imported ore and persistently tight supply of domestic ore combined to push ore-side costs higher; caustic soda costs showed regional divergence, stable in north China but lower in south China, with limited overall impact on costs. However, energy costs pulled back slightly during the period, providing some buffer against the cost increase.
Looking at cost sub-items:
Bauxite side, imported ore prices maintained their upward trajectory in July, becoming the core driver of higher costs. Elevated ocean freight rates, coupled with reduced shipments and increased landed costs as Guinea's rainy season approached, led to markedly higher imported ore quotes, passively raising procurement costs for alumina refineries. On the domestic ore side, the lingering impact of mine accidents persisted while mine production resumptions proceeded at a slow pace, keeping supply tight; some alumina enterprises had already been forced to adjust production pace as a result, and domestic ore prices in July exceeded June levels. The tug-of-war between sellers and buyers intensified—although alumina refineries sought to push for lower prices, robust supply-side support made ore prices more likely to rise than fall overall. Looking ahead to August, there remains no clear timetable for domestic supply recovery, while imported ore shipments are expected to continue shrinking due to the rainy season; ore prices are expected to stabilize at highs, with imported ore quotes likely to have slight upside room.
Caustic soda side, the domestic caustic soda market remained broadly stable in July, with regional divergence in performance. In north China (Shandong, Shanxi, etc.), soda prices fluctuated little, remaining largely steady, with no significant adjustment to long-term contract prices; in south China (Guangxi, etc.), prices were lowered by approximately 100 yuan/mt, with most enterprises keeping prices at relatively low levels to strengthen regional cost advantages. Overall, the caustic soda segment had limited impact on alumina refinery costs, placing no additional pressure on total costs. Entering August, Shanxi long-term caustic soda contract prices were raised by 50 yuan/mt, expected to nudge local costs slightly higher, though the impact on alumina enterprises' overall costs is limited; Guangxi further reduced prices by 150 yuan/mt, with local caustic soda costs already at relatively low industry levels, and regional cost advantages are set to widen further.
In summary, July alumina costs rose markedly, led by the sharp rise in ore prices, with a slight pullback in energy costs providing some buffer. Looking ahead to August, the domestic ore supply deficit is unlikely to ease, and imported ore shipments are expected to decline due to rainy-season disruptions, leaving potential for further quote increases; ore prices are expected to stabilize at highs. Caustic soda will exhibit a regional divergence pattern, with north China edging up slightly and south China continuing to decline, moving sideways overall. The weighted average full cost of alumina in China is expected to range between 2,700–2,820 yuan/mt in August, with the weighted average cash cost projected at 2,530–2,650 yuan/mt.
(The above information is derived from market data collection and comprehensive assessment by the SMM research team and is provided for reference only. This article does not constitute direct investment, research, or decision-making advice. Clients should exercise caution in their decision-making and not rely on this as a substitute for independent judgment. Any decisions made by clients are not the responsibility of SMM.)
Data source: SMM
(Zhao Baichuan 021-51666812)
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