Mysteel: China aluminum sector sees rising margins in June
According to Mysteel Aluminum Cost Model, the weighted average full cost of primary aluminum in China was Yuan 15,875/t in June, down Yuan 347/t from a month ago. The whole sector faced an average profit of Yuan 2,682/t, up Yuan 597/t from May. The decrease of aluminum production cost was mainly driven by falling power, alumina and anode costs.
Data: Mysteel
The weighted average price of captive power was down 4% on month to Yuan 0.39/kWh in June, which means a decrease of Yuan 235/t in power cost for those capacities using captive power.
The weighted average price of grid power was down 0.2% on month to Yuan 0.473/kWh in June. For those capacities relying on grid power, there was a decrease of Yuan 146/t in power cost.
Data: Mysteel
Alumina prices continued to edge down in the first half of June due to oversupply. However, the price bottomed out in the second half of the month, and tradable prices in southwest China edged up driven by aluminum restarts in Yunnan. Aluminum smelters in Yunnan have begun to resume production in late June, leading to alumina demand recovery in southwest. However, alumina prices in north China remained flat due to unchanged supply and demand.
Data: Mysteel
Anode price remained on a downward trajectory in June due to falling production cost. A major aluminum company in Shandong lowered its purchase price for June to Yuan 4,225/t, down Yuan 300/t from a month ago.
Data: Mysteel
Based on aluminum price and the full cost in June, 99.2% of aluminum capacity in China was profitable, increasing 2.2% from May. All smelting capacity was profitable based on the cash cost.
Data: Mysteel
Mysteel expects that aluminum cost will be stable in July, as anode price has stopped falling, alumina prices have begun to edge up, and thermal coal prices are relatively stable.
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