On January 5, 2026, the first trading day after the New Year’s holiday, the SMM A00 aluminium price surged by RMB 850 per tonne in a single day, surpassing the largest single-day increase of any day in 2025. As a result, aluminium billet processing fees across regions rapidly pulled back, generally decreasing by RMB 0–160 yuan per tonne, but still remaining above the zero line. However, on the following day, January 6, 2026, the aluminium price soared another RMB 600 per tonne, initiating an extreme market trend that lasted nearly two weeks, aluminium billet processing fees fell below the zero line and entered negative territory.
Against the backdrop of aluminium billet production costs generally maintained at RMB 200–300 per tonne, why did “negative processing fees” occur? To understand this anomaly, it is necessary to analyse from the perspectives of both aluminium billet producers and traders.
First, from the perspective of aluminium billet producers, they can be categorised into two types:
One type consists of enterprises with their own aluminium capacity, capable of directly using self-produced liquid aluminium to cast aluminium billets; the other type needs to purchase aluminium externally as raw material, typically adopting a settlement model of “monthly average aluminium price + local liquid aluminium discount.”
For the former, according to SMM calculations, the current national weighted full cost of aluminium is approximately RMB 16,000–16,500 yuan per tonne. Based on the post-holiday A00 aluminium price, the profit per ton is as high as RMB 7,000–8,500. Even after deducting RMB 200–300 per tonne processing cost, there is still substantial profit. Therefore, these enterprises have a strong incentive to lower processing fees to accelerate sales, quickly recover funds, and lock in profits.