Alumina prices pulled back significantly, with the cost of aluminum down 3.7% MoM in April. [SMM Analysis]

SMM 05.06:

According to SMM data, the average tax-inclusive full cost of China's aluminum industry was 16,386 yuan/mt in April 2025, down 3.7% MoM and 0.9% YoY, primarily due to a significant pullback in alumina prices during the period. SMM data showed that the monthly average SMM Alumina Index was 2,954.95 yuan/mt during the period (March 26-April 25), down 10.62% MoM. The average spot price of SMM A00 aluminum was approximately 20,074 yuan/mt in April 2025 (March 26-April 25), with the domestic aluminum industry achieving an average profit of about 3,688 yuan/mt.

As of month-end April 2025, the operating capacity of domestic aluminum reached 43.91 million mt, and the industry's highest full cost fell to 19,218 yuan/mt. If the industry uses monthly average prices for calculations, 100% of the domestic aluminum operating capacity was profitable in April.

From the perspective of the cost distribution range of aluminum capacity:

The overall distribution range of the full cost of aluminum in April was lower. In April 2025, the lowest full cost of aluminum was approximately 13,289 yuan/mt, and the highest full cost was approximately 19,218 yuan/mt. In March, the lowest full cost of aluminum was approximately 13,865 yuan/mt, and the highest full cost was approximately 20,089 yuan/mt. The capacity distribution is as follows:

In March, the proportion of domestic aluminum capacity with a full cost below 15,000 yuan/mt was 3.3%;

The proportion of capacity with a full cost in the range of 15,001-16,000 yuan/mt was 29.7%;

The proportion of capacity with a full cost in the range of 16,001-17,000 yuan/mt was 30.4%;

The proportion of capacity with a full cost in the range of 17,001-18,000 yuan/mt was 27.5%;

The proportion of capacity with a full cost in the range of 18,001-19,000 yuan/mt was 9.0%;

The proportion of capacity with a full cost exceeding 19,001 yuan/mt was 0.2%.

Cost breakdown:
In terms of alumina raw materials, according to SMM data, the average SMM alumina index price in April was 2,955 yuan/mt (from March 26 to April 25). The weighted average cost of alumina for the national aluminum industry decreased by 10.4% MoM, accounting for 39% of the total aluminum production cost. Currently, with the commissioning of new capacity and the resumption of production from maintenance, alumina operating capacity has rebounded significantly, increasing by 3.48 million mt/year WoW. In the short term, some alumina refineries have planned maintenance and production cuts, but at the same time, new alumina capacity will further ramp up production, potentially leading to slight fluctuations in alumina operating capacity. Overall, the tightening of spot alumina supply caused by concentrated maintenance and production cuts in the early stage is expected to ease, and prices are expected to continue fluctuating downward in the short term.

For auxiliary materials, prebaked anode prices continued to rise in April, primarily due to the fact that although the price of petroleum coke, a key raw material, showed signs of weakening, it remained at a high level, providing strong cost support. In terms of aluminum fluoride, the cost of raw materials remained high, and the supply-side contraction continued, driving a significant increase in aluminum fluoride prices in April. The combined impact of these two factors directly pushed up the production cost of aluminum in April. Entering May, the market dynamics changed. Affected by the continuous decline in prices due to weak downstream demand in the raw material market, prebaked anode prices began to fall. The aluminum fluoride market also faced significant downward pressure on prices due to continuously declining costs. Overall, it is expected that the auxiliary material market will show a downward trend in May, which will drive a synchronous decrease in the production cost of aluminum.

Regarding electricity prices, they remained stable overall in April. In some regions, the decline in coal prices led to a reduction in electricity costs. The national average electricity price fell slightly in April, with electricity costs accounting for 34% of the total aluminum production cost. Entering May, electricity prices are expected to remain stable, but attention should be paid to potential reductions in electricity prices in south-west China after the rainy season begins.

Entering May 2025, the monthly average price of alumina continued to decline; the cost of auxiliary materials decreased; and the cost of electricity remained stable. Overall, the cost of aluminum may show a downward trend. Taking everything into consideration, SMM forecasts that the average tax-inclusive full cost of the domestic aluminum industry in May 2025 will be around 16,000-16,400 yuan/mt.