China's alumina sector sinks deeper into losses as costs stay sticky and output rebounds

According to Mysteel's data, China's weighted average full cost of alumina production stood at RMB 2,864.65 per tonne as of the end of August 2026, up about RMB 38.44 per tonne from the previous month. Currently, roughly half of the industry's capacity is running at a loss on a full-cost basis, and some producers have even begun posting cash-flow losses. With no signs of easing on the cost side and alumina prices continuing to slide, the sector's pressure shows no sign of relief.

Looking back on August, the bauxite prices held steady. Bottlenecks in incremental domestic mine supply persisted, and the supply-demand picture remained largely unchanged. Beyond routine long-term contracts, alumina refineries struggled to secure spot volumes and could only supplement with imported ore.

On the import side, a major Guinean mine disclosed its September long-term price around month-end with terms largely unchanged from August. Downstream buyers, factoring in the pullback in international fuel prices, viewed the overall CIF price as lower than the prior month; however, persistently volatile high freight rates has continued to weigh on Guinea's spot shipment volumes, so offtake appetite has broadly improved. Separately, a mid-sized Guinean mine in the Boffa region cut its August long-term quote by USD 1 per tonne (dry) to USD 71 per tonne (dry), still above refineries' acceptable level, so negotiations remain ongoing.

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The North China liquid caustic soda market stayed divergent in August. In Shandong, prices held roughly flat in the first half, then saw a periodic uptick in the second half, though local high quotes struggled to hold; toward month-end, some prices eased again. In Cangzhou, Hebei, sellers adjusted discounts flexibly based on inventories, with base prices moving little.

August thermal coal in producing areas trended stronger on tight supply and demand. Early month extended the firm tone with prices rising steadily. From mid-month, stricter output controls and crackdowns on overproduction, plus frequent rainfall and notably constrained output at Inner Mongolia's open-pit mines, kept supply releases tight, bolstering upside. Toward month-end, many pits hit monthly quotas and shuttered, further tightening marketable stocks.

On the demand side, however, it was lacklustre: the peak summer restocking window concentrated in mid-to-early month, while month-end saw marginal daily-consumption decline as peak season waned. Demand in non-power sectors resumed slowly, with weak chemical and building-material procurement offering limited support to coal prices.

According to Mysteel, China's average alumina industry profit in August 2026 came in at RMB -153.65 per tonne, down RMB 89.44 per tonne month-on-month. No large-scale cuts or maintenance shutdowns were reported. Most producers kept operating while pushing cost cuts and efficiency gains; conversely, two large refineries in Guangxi and Shanxi ramped back to full capacity, pushing overall supply capacity higher. Against this supply growth backdrop, spot prices drifted lower, and operational pressure remained heavy.

Looking into September, domestic bauxite prices have stayed flat. Shanxi saw a small volume of lower-grade domestic long-term deals, while Henan's incremental domestic supply still hasn't landed, so the supply-demand picture stays roughly balanced with limited near-term volatility.

For imported ore, standard 45/3 grade Guinea ore shows a mild upward bias, but elevated freight on high oil prices plus diverging north-south alumina prices have widened spot deal spreads. Mysteel tracks southern refineries booking spot Guinea ore at USD 71 per tonne (dry), while a northern refinery paid USD 72 per tonne for the same grade.

For caustic soda in September, grid-power tariff quotes are expected to edge lower, with chlor-alkali blended costs seen moderating. Maintenance pressure at domestic chlor-alkali plants is easing and capacity utilization rates may tick up. Excluding new capacity in Gansu, September caustic output is projected near 3.44 million tonnes, accounting for one fewer production day.

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On demand, September export bookings carried over from August suggest liquid caustic exports rise month on month. Alumina refineries' planned September purchase increases may also prop up caustic demand. Hence September is expected to post a negative supply-demand gap, continuing to support most 32 per cent liquid alkali prices. For 50 per cent alkali, some regions sit at premiums with limited arbitrage room, and with September evaporation restorations expected, the outlook is mildly bearish.

For coal, September brings marginal shifts on both sides. Demand is easing as summer peak winds down and plants' daily consumption falls seasonally, weakening price support. Supply stays supported though, since mine safety inspections persist and capacity releases remain curbed. Meanwhile, winter restocking is gradually kicking off in some regions, partly offsetting weaker off-peak demand. With bullish and bearish factors intertwined, September coal prices are likely to range high with limited upside and downside, basically trading in a high-level oscillation pattern.

Note: This news is published under a content and exchange agreement with Mysteel