The AZ team had a lunch together in Shanghai last Friday. We had a chat about the current cash cost curve. Since our final cash cost report will be ready next week, we had a guess on current cash cost and who will be on the bottom of the cash cost curve.
In general, we guess the industry average cash cost will be around RMB13300 now. The coal and anode price had a big rise in the past three months. The anode average price rose around RMB450 and average coal price increased around RMB120.
The alumina price had a big drop from RMB3000 to RMB2450 in first quarter. It offset the rise of coal and anode price. In general, the cash cost declined in first quarter.
One of our staff guessed the lowest-cost smelter will be Shandong Weiqiao. Weiqiao has the advantages with its alumina and electricity cost. Others said the lowest cost was in Xinjiang East hope or Chalco Baotao. They have low electricity fee, but their freight fee is high as well. Someone else guessed Shandong Xinfa. Who will be right? The cash cost of production is an important number to understand, because it tells us whether the current price will be supported. And the cash cost curve tells us who is making money and who isn’t.
We will issue our cash cost report next week. Before we release our cash cost result to the public, we will send it to our subscriber first. Please email us if you need a copy.
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