According to SMM data, the tax-inclusive average full cost of domestic aluminium smelters in April 2024 was 16,539 yuan/mt, up 0.48% MoM and 3.55% YoY. Although aluminum cost increased MoM in April, the industry's profit increased significantly MoM due to the sharp rise in aluminum prices. The average price of SMM spot A00 aluminum was 20,236 yuan/mt, and the average profit of the domestic aluminium industry stood at 3,697 yuan/mt, up 35.12% MoM and 35.16% YoY.
In April, domestic aluminum operating capacity was 42.62 million mt, and the industry's highest full cost was approximately 19,010 yuan/mt. Based on the monthly average price, all of the domestic aluminium operating companies were profitable. The cost of aluminum rose in April, up 78 yuan/mt MoM, mainly due to the increase in electricity prices and rising auxiliary materials prices.
The proportion of production capacity with a full cost below 15,000 yuan/mt declined by 0.2% to 15.7%, mainly distributed in Shandong and Xinjiang; the share of capacity by full cost and their MoM changes: 15,001-16,000 yuan/mt (16.5%, -3.7%); 16,001-17,000 yuan/mt (26.6%, +2.3%); 17,001-17,500 yuan/mt (21.1%, +1.7%); over 17,500 yuan/mt (20%, -0.2%), mainly distributed in Guangxi, Sichuan, Guizhou and Chongqing.
In March 26-April 25, SMM’s average alumina price was approximately 3,307 yuan/mt, down 24 yuan/mt MoM. The monthly average price of alumina in Shanxi and Henan decreased significantly, the monthly average price in Guangxi and Guizhou stabilized, and that in Shandong increased. In April, Shandong accounted for a bigger share of national alumina production than Shanxi and Henan. In addition, due to the update of unit consumption, the alumina cost in aluminium production rose slightly. The alumina cost of producing one mt of aluminum accounted for 39.5% of the full cost.
In addition, the prices of other auxiliary materials such as aluminum fluoride increased in April, and the cost of other auxiliary materials rose by 10.5% MoM. Due to the increase in electricity prices and update of power consumption of aluminum liquid, the electricity cost of aluminum rose slightly; other costs stabilized.
Heading into May 2024, alumina prices rose rapidly. As of May 10, SMM’s average alumina price was 3,678 yuan/mt. SMM expects that the tight balance of domestic alumina market will continue, and spot prices may remain high. The SMM national average monthly price of alumina is expected to increase significantly in May, and alumina cost of aluminum may increase significantly. In terms of electricity, the price of thermal coal increased recently, and the electricity price in May may pick up slightly. SMM predicts that the tax-inclusive average full cost of domestic aluminium industry in May could reach 17,000-17,300 yuan/mt.
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