SMM May 18 News:
Due to the significant decline in bauxite prices from April to May, the production cost of alumina has decreased rapidly, gradually alleviating the loss pressure on alumina enterprises. As of May 16, according to SMM's daily cost-profit model, the average cost of the alumina industry has dropped to 2,812 yuan/mt, a decrease of 386 yuan/mt compared to early April. Among them, the cost of bauxite has decreased by 323 yuan/mt, and the cost of caustic soda has decreased by 54 yuan/mt.
As of May 16, SMM's CIF index for imported bauxite was reported at $70.41/mt, a decrease of $22.69/mt compared to April 1. Bauxite from Guinea has fallen from $91/mt to $70/mt.
Benefiting from the decline in alumina production costs, the average profit level of the alumina industry has turned from loss to profit. As of May 16, according to SMM's daily cost-profit model, the theoretical profit of alumina has reached 153 yuan/mt, a rebound of 277 yuan/mt compared to early April. Meanwhile, since mid-April, due to concentrated production cuts for maintenance, the supply of alumina in the spot market has tightened, and alumina prices have rebounded, which may further alleviate the loss pressure on alumina enterprises.
SMM Commentary: The alumina industry has generally turned profitable, and some alumina capacities may resume production. However, due to renewed disruptions in the bauxite supply side, there is significant uncertainty, and there is a possibility of a rebound in bauxite prices, which may lead to further changes in alumina costs. It is necessary to continuously monitor the bauxite supply situation in the future.
