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Analysis and forecast of alumina cost in China in July 2023

August 15, 2023
According to Mysteel data show that as of July 2023, the weighted average full cost of China's alumina industry is 2679 yuan/ton (optimized statistical caliber), down 12 yuan/ton from the previous month. In July this year, the price of domestic alumina raw materials continued to show mixed situation, compared with the overall performance of caustic soda prices is relatively weak, bauxite and coal prices have gradually increased, resulting in increased pressure on enterprises to reduce costs.
First, the domestic bauxite price deduces the stable rising market and continues to maintain a high level of operation. The continuous impact of mining reclamation in Henan Province and the increase of domestic rainfall weather have led to the restriction of domestic bauxite mining, shortage of supply, and cautious rise of local quotations. The imported mine is still mainly executed by the long order, the spot supply is still less, and the increase in import demand leads to the high price willingness of the cargo holder and the high price.
Second, domestic caustic soda prices were mixed. Although the maintenance of equipment in local areas has led to a decline in supply, which has formed a favorable price, the lack of improvement in domestic downstream demand, the superimposed downturn in export inquiries, and the market mentality of taking goods is cautious. At the same time, the main downstream procurement prices continue to fall, resulting in continued declines in regional prices, and the market is cautious and wait-and-see.
Third, domestic coal prices have risen steadily. It is in the summer stage of welcoming kurtosis, and the high temperature weather will continue, based on the relatively stable realization of the long association, and the downstream stage release demand for replenishment. With the increase in the demand for power plants, the increase in the purchase price of large coal companies, the boost in market sentiment in producing areas, the increase in coal pulling trucks in coal mines, and the stable coal prices in the main producing areas.
According to Mysteel statistics, the average profit of China's alumina industry in July 2023 was 156.06 yuan/ton. Although domestic bauxite and coal prices rose in July, leading to little room for enterprise cost reduction, domestic alumina prices continued to rise in the month, and industry profits were repaired.
It is expected that the probability of narrow fluctuation of domestic alumina raw material prices in August is larger, and the cost support is getting stronger. In terms of ore, short-term domestic bauxite mining capacity is insufficient, domestic mine supply tension is difficult to ease, while recent alumina prices continue to rise, driven by profit repair production willingness is strong, just demand is expected to increase, it is expected that domestic bauxite prices in August to continue high shock trend. Caustic soda, although the current price of caustic soda bottoming difficulty still exists, but some downstream industries began a new round of bidding and procurement, the arrival of the traditional small peak season of the overlapping industry and the appropriate price of liquid caustic soda, the purchase volume or a small increase, the supply side of liquid caustic soda production decline for several months, the gap between market supply and demand began to gradually narrow, is expected in August domestic caustic soda prices or rebound market. In terms of coal, the supply of coal in the main producing areas remains stable, the national high temperature weather may be gradually reduced, the daily consumption of power plants will be slightly reduced, coupled with the impact of strong rainfall brought by typhoons, hydropower or improvement, driving downstream procurement demand to reduce, while the supply of power coal long association is sufficient, non-electricity just need to purchase, in the supply of loose and high inventory of power plants, Coal prices are expected to be range-bound and weak in August.
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