SMM, July 16:
Domestic Bauxite:
Supply disruptions push up domestic ore prices; alumina enterprises' long-term contract purchase prices rise overall
Affected by coking coal-related incidents in Shanxi, mining in major domestic bauxite producing areas such as Shanxi and Henan faced some short-term disruptions, leading to phased changes in ore supply. Driven by supply tightening expectations, the domestic ore price center edged higher. Meanwhile, alumina prices remained at relatively high levels, and alumina enterprises' tolerance of rising raw material costs was moderate; in the short term, they mostly passively accepted the current ore prices. As of today, in Shanxi, bauxite with an Al/Si ratio of 5 and 60% alumina content, VAT-exclusive EXW price at crushing plants was around 530-550 yuan/mt; in Henan, bauxite with an Al/Si ratio of 5 and 60% alumina content, VAT-exclusive EXW price at crushing plants was around 500-540 yuan/mt; in Guiyang, bauxite with an Al/Si ratio of 6 and 60% alumina content, VAT-inclusive EXW price was 490-540 yuan/mt; in Guangxi, bauxite with an Al/Si ratio of 6 and 53% alumina content, VAT-exclusive EXW price at crushing plants was 320-335 yuan/mt.
Imported Bauxite:
Rising international oil prices drove up both mine costs and ocean freight rates, leading to diverging imported bauxite prices
According to data as of July 10, weekly port departures of bauxite from major Guinean ports totaled 3.1869 million mt, down 219,400 mt from the previous week, with shipments basically stable. As US-Iran tensions heated up again, oil prices rose once more, and ocean freight rates from Guinea to China soon followed with an upward trend; market offers rose to the $34-35/mt range, and mine costs across various mines increased to varying degrees. Coupled with Guinean policy uncertainties and transport impacts from adverse weather, Guinean mines tightened control over bauxite shipments. In Australia, as of July 10, weekly port departures of bauxite from major Australian ports totaled 721,300 mt, down 346,800 mt from the previous week, a slight decline in shipments; further attention is needed on shipment pace from Australian mines and changes in port departures. As of July 10, China's bauxite port arrivals reached 3.9968 million mt, down 98,700 mt from the previous week; continued monitoring is required of the impact of elevated and fluctuating oil prices and ocean freight rates on future arrival pace and landed costs.
In terms of prices, Guinean bauxite long-term contract quotations for July were in the $70-71.5/mt range, little changed from June. Meanwhile, bauxite inventories at domestic alumina refineries remained high, remaining relatively stable this week, with days of inventories at about 95 days, exerting some top pressure on ore prices. For Guinean bauxite, as transportation costs from Guinea to China rebounded and mine costs increased, coupled with the shipment reductions caused by the traditional rainy season and adverse weather, upstream producers and traders maintained firm quotes, remaining stable in the high price range of $70-72/mt; due to the dual impact of sustained high inventories and contracting profits, domestic alumina refineries lowered their intended transaction prices to $70/mt or lower; the upstream and downstream of the bauxite market experienced severe price divergences, market transactions slowed down, gradually returning to a state of bargaining. As of Thursday this week, a total of three bauxite transactions were reported: one deal of grade 45/3 Guinean bauxite was transacted at $70.5/mt CIF northern ports, with arrival expected in late August; one deal of grade 45/3 Guinean bauxite was transacted at $71/mt CIF northern ports; one deal of grade 45/3 Guinean bauxite was transacted at $72/mt CIF northern ports, with arrival expected from late July to early August. As of Thursday this week, Guinean bauxite FOB quotes were $38-40/mt, with the average price flat compared to last Thursday; Guinean bauxite CIF price was reported at $69-72/mt, with the average price falling by $0.5/mt from last Thursday; the SMM imported bauxite index price was reported at $70.36/mt, up $0.18/mt from last Thursday. Future bauxite prices will still depend on the cost situations of individual mines, the impact of Guinea's traditional rainy season and the government's bauxite export quota policy on overall shipments, and SMM will continue to closely monitor the market trends and transactions in the bauxite market.
Overall, domestic ore market prices maintained the current level; meanwhile, inventories at domestic alumina refineries remained high (about 96 days), and the price negotiation between buyers and sellers continued; the uncertainty over Guinea's quota policy, the decline in shipments, and the traditional rainy season also exerted some upward pressure on bauxite costs. In the short term, due to the dual impact of costs and policy leading to reduced shipments, imported ore prices are expected to continue the high-level bargaining pattern; afterwards, close attention should be paid to the implementation of Guinea's quota policy and trends in ocean freight rates.
