The combined effects of alumina and self-supplied electricity prices caused an uptick in the cost of electrolytic aluminium in August.
The Mysteel aluminium research team extensively analysed electrolytic aluminium enterprises in China. In August 2023, the weighted average full cost of the Chinese electrolytic aluminium industry stood at 15,764 yuan per tonne, reflecting a 137 yuan per tonne increase compared to the previous month.
When compared to the average spot price of aluminium ingots at Shanghai Steel Union, which was 18,654 yuan per tonne in August, the industry's overall profit amounted to 2,890 yuan per tonne. The rise in aluminium prices slightly outpaced the increase in costs, resulting in an average profit surge of 163 yuan per tonne in the electrolytic aluminium industry for August. Among the various expenses associated with electrolytic aluminium production, the rising cost of alumina contributed to 82 per cent of the overall increase in electrolytic aluminium expenses while power costs experienced a minor uptick, and anode costs remained relatively stable.
August witnessed an increase in self-supplied electricity prices, influenced by procurement and delivery cycles.
The thermal coal market exhibited a fluctuating pattern in August, with prices oscillating and then rebounding. By the end of August, data from Mysteel8 indicated that pit prices for 14 sample coal mines in Shaanxi had fluctuated, ranging from a 50 yuan per tonne decrease to a 63 yuan per tonne increase compared to July's end.
The average pit price was 4.9 yuan per tonne, lower than the previous month. Pit prices for 17 sample coal mines in Inner Mongolia experienced an 85 per cent decrease compared to the end of June and then rose by 50 yuan per tonne, resulting in an average decrease of 13.3 yuan per tonne. Two sample coal mines in Xinjiang maintained stable pit prices. The plate price for port power coal cars dropped by 5-25 yuan per tonne, while Indonesian coal saw a decrease of 50 yuan per tonne.
During August, the domestic thermal coal market initially displayed weakness, partly due to a typhoon-induced disruption that affected overall supply and demand. However, the middle and late stages of the month saw a slight increase in port spot prices, bolstering market sentiment and leading to a minor coal price rebound in producing areas, ranging from 10-20 yuan per tonne.
Notably, the Indian Federal Ministry of Electricity's requirement for coal-fired power plants to operate at full load until the end of October is expected to stimulate Indian coal demand and increase inquiries for Indonesian coal. This may result in higher quotes from foreign mines, with ongoing attention to foreign mine price fluctuations.
According to data from Mysteel coal mine start-ups as of September 1st, the national start-up rate for 462 coal mines stood at 88.4 per cent, mirroring the previous week's figures. Mysteel's statistics showed that as of September 1st, the total coal storage in 253 power plants across the nation's sample areas amounted to 43.099 million tonnes, with daily consumption reaching 2.081 million tonnes and an available supply of 20.7 days.
Mysteel conducted a comprehensive survey on the coal arrival prices at self-owned power plants of electrolytic aluminium enterprises in China, considering procurement and delivery cycles. Simultaneously, the team assessed the overall power generation costs for aluminium plants. The findings revealed that the weighted average self-supplied electricity price for China's electrolytic aluminium industry increased by 0.01 yuan per kWh compared to the previous month, reaching 0.392 yuan per kWh.
This resulted in an average power cost increase of 135 yuan per tonne for production facilities using self-supplied electricity. Regionally, price fluctuations in different coal-producing areas in July had varying impacts. Pit prices in Inner Mongolia remained stable, while prices in Shaanxi and other regions experienced significant increases, leading to limited changes in the self-supplied electricity prices of smelters in Shandong but substantial increases in Henan. Considering the price trend of thermal coal in August, which was primarily on the decline, it is anticipated that self-supplied electricity prices for smelters will experience a slight decrease in September.
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