Alumina prices plunge; February aluminium costs may pull back by nearly 2,500 RMB/t

According to SMM data, the average tax-inclusive full cost of China's aluminium industry in January 2025 was RMB 19,989 per tonne, down 5.3 per cent M-o-M and up 22.7 per cent Y-o-Y, mainly due to the sharp pullback in spot alumina prices during the period. The average spot price of SMM A00 aluminium in January 2025 was approximately RMB 19,970 per tonne (December 26, 2024–January 24, 2025). The domestic aluminium industry recorded an average loss of about RMB 19 per tonne, with the loss narrowing by RMB 892 per tonne M-o-M, and the industry overall was close to the break-even point.

As of the end of January 2025, the operating capacity of domestic aluminium reached 43.515 million tonnes. The highest full cost in the industry was approximately RMB 23,372 per tonne. Based on the monthly average price, 45.4 per cent of the domestic aluminium operating capacity was profitable in January, while the full cost of nearly 23.74 million tonnes of capacity remained higher than the monthly average price of SMM A00 aluminium, accounting for 54.6 per cent, down 16.4 percentage points M-o-M.

From the cost distribution range of aluminium capacity

In January, the full cost of aluminium decreased by RMB 1,125 per tonne M-o-M, and the overall cost distribution range pulled back further. In December 2024, the lowest full cost of aluminium was approximately RMB 15,724 per tonne, and the highest was approximately RMB 24,092 per tonne. In January 2025, the lowest full cost was approximately RMb 15,936 per tonne, and the highest was approximately RMB 23,372 per tonne. The capacity distribution was as follows:

In January, the proportion of domestic aluminium capacity with a full cost below RMB 18,000 per tonne was 3.1 per cent;

The proportion of capacity with a full cost in the range of RMB 18,001–19,000 per tonne was 29.1 per cent;

The proportion of capacity with a full cost in the range of RMB 19,001–20,000 per tonne was 14 per cent;

The proportion of capacity with a full cost in the range of RMB 20,001–21,000 per tonne was 30.3 per cent;

The proportion of capacity with a full cost in the range of RMB 21,001–22,000 per tonne was 16 per cent;

The proportion of capacity with a full cost exceeding RMB 22,001 per tonne was 7.6 per cent.

The proportion of aluminium capacity with a full cost above RMB 20,000 per tonne was 53.8 per cent, down 23.4 percentage points M-o-M.

From the cost breakdown

On the alumina raw material side, according to SMM data, the national average price of alumina in January 2025 (December 26, 2024–January 24, 2025) was RMB 5,090 per tonne, pulling back by RMB 657 per tonne compared to December. The weighted average cost of alumina in the domestic aluminium industry decreased by 10.9 per cent M-o-M in January. From mid-to-late January, spot alumina prices accelerated their decline, with the drop far exceeding previous expectations. By the end of January, spot alumina prices in north China had fallen below RMB 4,000 per tonne, while prices in south China were also gradually approaching the RMB 4,000 per tonne threshold. The average monthly price of alumina in February is expected to drop by more than RMB 1,000 per tonne M-o-M, significantly reducing aluminium costs.

For auxiliary materials, the procurement price of prebaked anodes slightly increased in January, while aluminium fluoride prices declined due to the drop in aluminium hydroxide prices. In February, the procurement price of prebaked anodes is expected to maintain its upward trend, while aluminium fluoride prices are expected to decline further as aluminium hydroxide prices continue to fall.

Regarding electricity prices, the national average electricity price remained basically stable in January, and the power cost of aluminium is also expected to remain stable in February.

In February 2025, the average monthly price of spot alumina is expected to drop significantly, leading to a substantial reduction in aluminium costs. Power costs are expected to remain stable, while auxiliary material costs will show mixed changes. Overall, SMM expects the average tax-inclusive full cost of the domestic aluminium industry in February 2025 to be around RMB 17,200–17,800 per tonne.

Source: SMM