Daily Alumina Profit Margins Narrowed to Around 100 Yuan/mt; Shanxi and Henan Alumina Capacity Using Imported Ore Faces Losses [SMM Analysis]

SMM, February 21:

As of February 21, according to SMM's daily cost-profit model calculations, the full cost of alumina production was approximately 3,244 yuan/mt, down 152 yuan/mt from 3,396 yuan/mt at the beginning of the year. This decrease was mainly attributed to a reduction in bauxite costs, which dropped by 158 yuan/mt, reducing its share in the terminal alumina cost by 2 percentage points.

The decline in bauxite costs for alumina production was primarily due to the sharp drop in alumina prices, which exerted pressure on bauxite prices, causing them to pull back. Under these circumstances, the profit margin for alumina has shown a significant contraction. As of February 21, SMM's daily cost-profit model calculations indicated that theoretical alumina profits had decreased to 101 yuan/mt, down by 2,178 yuan/mt compared to January 2.

In particular, alumina capacities using imported bauxite in Shanxi and Henan regions generally faced losses. According to SMM's daily cost-profit model calculations for alumina in Shanxi and Henan, as of February 21, theoretical losses for alumina production using imported bauxite were nearly 400 yuan/mt in Shanxi and approximately 456 yuan/mt in Henan. Furthermore, the current spot alumina prices have already reached the marginal cost for producing alumina using imported bauxite in Guangxi and Shandong.

Under the pressure of losses, some alumina capacities may undergo partial reductions or suspensions in the future. Over the past two weeks, there have been reports of minor alumina maintenance and capacity adjustments in Shanxi and Henan, with the weekly operating rate of alumina dropping back slightly.

(The above information is based on market data collection and comprehensive evaluation by the SMM research team. The information provided herein is for reference only and does not constitute direct investment research advice. Clients should make cautious decisions and not replace independent judgment with this information. Any decisions made by clients are unrelated to SMM.)

Data source: SMM Click on the SMM Industry Database for more information

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