China's electrolytic aluminium cost analysis

In recent years China's electrolytic aluminium production has been in the rising stage, analysis of electrolytic aluminium production, there is a topic can not be avoided, is the cost of electrolytic aluminium production.

In recent years China's electrolytic aluminium production has been in the rising stage, analysis of electrolytic aluminium production, there is a topic can not be avoided, is the cost of electrolytic aluminium production. Today, aluminium fusion network will take you to analyse the cost of electrolytic aluminium production needs.

According to the production process of electrolytic aluminium, the production cost of electrolytic aluminium is roughly composed of the following parts:

(1) Raw materials: alumina, cryolite, aluminium fluoride, additives (calcium fluoride, magnesium fluoride, etc.), anode materials;

(2) Energy costs: electricity (direct current and alternating current), fuel oil;

(3) Manpower costs: wages and other management costs;

(4) Other costs: equipment wear and tear and depreciation, finance costs, Other costs: equipment wear and tear and depreciation, finance costs, transport costs, taxes, etc.

1. Electricity cost

The electrolytic aluminium industry is a power-intensive industry with a great demand for energy - electricity, and aluminium is called "fixed electricity". According to the aluminium network statistics, in recent years, electricity costs accounted for the proportion of the world average cost of aluminium ingots is 22.5%. Among them, Asia 19.9%, Europe 21.18%, the Americas 23%, Oceania 23.8%, Africa 24.5%. The cost of alumina accounts for about 28%-34% of the cost of production of aluminium ingots, relative to the shortage of alumina and electrolytic alumina production scale of countries, the fluctuation of the international price of alumina will affect its domestic production costs of electrolytic aluminium. These two costs account for more than half of the cost of electrolytic aluminium, or even up to 70%, becoming the main factors affecting the cost of electrolytic aluminium.

In terms of electricity, the electricity used by electrolytic aluminium enterprises is mainly divided into two kinds of self-provided electricity and the national grid, and the charges of the national grid are generally more than twice as high as the price of self-provided electricity. China's major electrolytic aluminium enterprises are mainly self-supplied electricity, mostly thermal power, so the price of electricity generally fluctuates with the price of coal. Coal prices have been rising for nearly a year, and started to maintain at a high level by the end of 2016, and in April 2017 started to decline slightly. Overall, the cost of electricity used for electrolytic aluminium rose in line with the increase in coal prices. In addition to self-provided electricity, about 30% of electrolytic aluminium enterprises in China do not have the ability to provide their own electricity and use the national grid.In 2016, the state has repeatedly helped aluminium enterprises to reduce their production costs through direct reduction of electricity tariffs, subsidies, aluminium power linkage, etc., and the average tariffs basically stabilized in the range of RMB0.28/kWh in the fourth quarter. This significantly reduces the cost of electricity, and also makes some electrolytic aluminium enterprises that have been shut down to resume production. In detail, according to the statistics of Aluminium Rong Network, the weighted average electricity price of China's electrolytic aluminium according to the start-up capacity in April 2017 was RMB 0.2962/kWh, up RMB 0.0025/kWh, or 0.84%, compared with March. Among them, the national electrolytic aluminium enterprises lowest comprehensive use of electricity price of 0.165 yuan / kWh, the highest comprehensive use of electricity price of 0.553 yuan / kWh. Sub-region, electrolytic aluminium according to the opening capacity weighted average price of electricity is the lowest province of Xinjiang (0.182 yuan / kWh), followed by Sichuan (0.279 yuan / kWh), Shaanxi (0.287 yuan / kWh), Shandong (0.289 yuan / kWh), Gansu (0.300 yuan / kWh), Henan (0.434 yuan / kWh) for the country's highest.

2. Alumina Cost

Alumina is mainly extracted from bauxite, so it can be obtained by processing bauxite or purchased directly.

(1) Bauxite

From the overall exploration and mining data of bauxite in China, the quantity of domestic bauxite mining is on a downward trend, while the consumption of bauxite in the same period is on the rise, with 139 million tonnes in 2015, and a year-on-year increase of 6.4% to 148 million tonnes in 2016. From the point of view of China's total annual consumption of bauxite, the domestic production of raw ore is far from supporting the demand. According to the statistics of Aluminium Rong Network, in 2016, China's total consumption of minerals, domestic minerals were 93.5 million tonnes and imported minerals were 54.5 million tonnes, of which imports accounted for 36.82%. It can be seen that the cost of bauxite is greatly constrained by imports, once the shortage is bound to trigger a rise in costs.

Bauxite prices over the past four years in 195 yuan / tonne to 340 yuan / tonne fluctuations between the price fluctuations are more violent. However, from the overall trend, the current supply of bauxite is sufficient, and the price will still be oscillating at a low level for a certain period of time. In addition, the quality of bauxite in China is relatively poor and the processing cost is high. Therefore, it is expected that China will use an increasing proportion of imported bauxite. It is expected that China will rely on imports for 60% of its bauxite by 2030.

(2) Alumina

Alumina and aluminium prices interact with each other to a certain extent, i.e. higher aluminium prices stimulate higher alumina prices, while at the same time alumina prices support aluminium prices.Starting from the second half of 2016, alumina prices in Mainland China rose rapidly and were stimulated to remain at a high level by the continuously rising aluminium prices. On the other hand, in 2016, China imported about 2.5 million tonnes of alumina, accounting for a relatively small 5% of China's total production. And while alumina prices have changed considerably since the beginning of this year, driving changes in aluminium prices at the same time, on the whole, China's market has been less affected by the international alumina market.

In general, the production cost of electrolytic aluminium control the whole industry's development progress, from the above analysis, aluminium fusion network that want to let China's electrolytic aluminium industry to maintain good development, control the cost side of the reform and optimization is essential.