Alumina Prices Halted Gains and Pulled Back; Aluminum Costs May Slightly Decrease in January 2025 [SMM Analysis]

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SMM, December 31:

According to SMM data, the average tax-inclusive full cost of China's aluminum industry in December 2024 was 21,114 yuan/mt, up 3.9% MoM and up 32.0% YoY, mainly due to the continued rise in alumina prices, electricity prices, and auxiliary material prices. The average spot price of SMM A00 aluminum in December 2024 was approximately 20,211 yuan/mt (November 26-December 25), with the domestic aluminum industry recording an average loss of about 911 yuan/mt, shifting from profitability to losses.

As of the end of December 2024, the domestic operating capacity of aluminum reached 43.535 million mt. The industry's highest full cost was approximately 24,092 yuan/mt. Based on the monthly average price, 29% of the domestic aluminum operating capacity in December was profitable, while nearly 30.9 million mt of capacity had a full cost higher than the December SMM A00 aluminum monthly average price, accounting for 71%.

From the cost distribution range of aluminum capacity:

In December, the full cost of aluminum increased by 792 yuan/mt MoM, with the overall cost distribution range shifting significantly upward. In November, the lowest full cost of aluminum was approximately 15,674 yuan/mt, and the highest was about 23,317 yuan/mt, while in December, the lowest full cost was approximately 15,724 yuan/mt, and the highest was about 24,092 yuan/mt. The capacity distribution was as follows:

In December, the proportion of domestic aluminum capacity with a full cost below 19,000 yuan/mt was 3.1%;

The proportion of capacity with a full cost in the range of 19,001-20,000 yuan/mt was 19.8%;

The proportion of capacity with a full cost in the range of 20,001-21,000 yuan/mt was 17.7%;

The proportion of capacity with a full cost in the range of 21,001-22,000 yuan/mt was 43.3%;

The proportion of capacity with a full cost in the range of 22,001-23,000 yuan/mt was 11.1%;

The proportion of capacity with a full cost exceeding 23,001 yuan/mt was 5.2%.

The proportion of aluminum capacity with a full cost above 20,000 yuan/mt reached as high as 77.2%.

From the cost breakdown:

On the alumina raw material side, according to SMM data, the national average price of alumina in December 2024 (November 26-December 25) was 5,380 yuan/mt, an increase of 367 yuan/mt compared to November. The weighted average cost of alumina in the domestic aluminum industry increased by 6.7% MoM in December. Starting from mid-to-late December, spot alumina prices in north China began to pull back slightly, but the decline was relatively slow. It is expected that alumina costs will see a slight correction in January, but the extent of the correction will be limited, and alumina costs will remain high.

For auxiliary materials, the costs of prebaked anodes and aluminum fluoride rose slightly in December. In January, the procurement price of prebaked anodes increased, while aluminum fluoride prices are expected to decline slightly with the slight pullback in aluminum hydroxide prices. Auxiliary material costs will show mixed trends, but the increase in prebaked anode costs is expected to dominate.

On the electricity price side, the national average electricity price rose slightly again in December, mainly due to the gradual entry into the dry season, with hydropower prices in south China rising significantly. In January, coal prices showed a slight pullback, and electricity prices are expected to remain stable or slightly decrease overall.

In January 2025, the SMM national daily average price of alumina turned to a slight decline, with alumina prices pulling back. Since alumina accounts for nearly 53% of aluminum costs, this is expected to lead to a slight decrease in aluminum costs in January. In January, alumina costs for aluminum are expected to decrease slightly, electricity costs are expected to remain stable or slightly decrease, and auxiliary material costs are expected to rise slightly. Overall, SMM estimates that the average tax-inclusive full cost of the domestic aluminum industry in January 2025 will be around 20,800-21,200 yuan/mt.

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

(Mingxin Guo 021-51595800)