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SMM July 23 News:
Domestic Bauxite:
Supply Disruptions Pushed up Domestic Ore Prices, with Overall Rise in Long-Term Contract Procurement Prices of Alumina Refineries
Affected by events related to Shanxi coking coal, mining in main domestic bauxite producing areas such as Shanxi and Henan was temporarily disrupted, leading to phased changes in ore supply. Meanwhile, alumina prices remained at relatively high levels, and alumina refineries showed moderate tolerance to raw material price increases, mainly passively accepting current ore prices in the short term. As of today, the VAT-exclusive EXW price for bauxite with an Al/Si ratio of 5 and 60% alumina content from crushing plants in Shanxi was approximately 530-550 yuan/mt; in Henan, the equivalent price was around 500-540 yuan/mt; in Guiyang, the VAT-inclusive EXW price for ore with an Al/Si ratio of 6 and 60% alumina content was 490-540 yuan/mt; and in Guangxi, the VAT-exclusive EXW price for ore with an Al/Si ratio of 6 and 53% alumina content was 320-335 yuan/mt.
Imported Bauxite:
High Mine Costs and Ocean Freight Rates Fluctuated, Leading to Continued Divergence in Imported Bauxite Prices
Data as of July 17 showed that weekly total port departures of bauxite from main ports in Guinea were 2.832 million mt, down by 354,900 mt from the previous week, with shipments edging down slightly. Due to renewed escalation in the US-Iran situation, oil prices rose again, and ocean freight rates from Guinea to China followed an upward trend, with market quotations rising to $34-35/mt, and mine costs increasing to varying degrees; coupled with policy uncertainty in Guinea and the impact of severe weather on transportation, Guinean mines strengthened control over bauxite shipments. For Australia, as of July 17, weekly total port departures of bauxite from main ports in Australia were 721,300 mt, up by 243,500 mt from the previous week, with shipments edging up. Future attention should be paid to the shipment pace of Australian mines and changes in port departures. As of July 17, China's bauxite port arrivals were 4.6632 million mt, up by 666,400 mt from the previous week. Continuous attention is needed on the impact of high oil price and ocean freight rate fluctuations on the pace of future arrivals and landed costs.
On the price side, Guinean long-term contract bauxite quotations for July were between $70-71.5/mt, little changed from June. Meanwhile, domestic alumina refinery bauxite inventories remained high, with this week's inventories relatively stable at around 95 days of inventories, exerting some ceiling pressure on ore prices. For Guinean bauxite, amid rebounding transportation costs from Guinea to China and rising mine costs, superimposed with shipment reductions caused by the traditional rainy season and severe weather, upstream suppliers and traders continued to hold firm offers, maintaining the high-end price range of $70-72/mt. Under the dual impact of persistently high inventory and shrinking margins, domestic alumina refineries lowered their intended transaction prices to $70/mt or lower. The upstream and downstream of the bauxite market had significant price divergence, and market transactions slowed down, gradually returning to a bargaining state. As of Thursday this week, the FOB quotation for Guinean bauxite was $38-40/mt, with the average price flat from last Thursday; the CIF price of Guinean bauxite was quoted at $69-72/mt, with the average price down $0.5/mt from last Thursday; the SMM Imported Bauxite Index was reported at $70.36/mt, flat from last Thursday. Going forward, bauxite prices will still depend on individual mine costs, the traditional Guinean rainy season, and the impact of the Guinean government’s bauxite export quota policy on overall shipments. SMM will continue to closely monitor bauxite market trends and transaction developments.
Overall, the domestic ore market price maintained the current level; meanwhile, inventory at domestic alumina refineries remained high (about 95 days), and the price negotiation between buyers and sellers continued; uncertainties in Guinea’s quota policy, declining shipments, and the traditional rainy season also exerted some upward pressure on bauxite costs. In the short term, due to the combined impact of costs and policies leading to reduced shipments, imported ore prices are expected to continue the high-level bargaining pattern, after which close attention needs to be paid to the implementation of Guinea’s quota policy and ocean freight rate trends.
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