Cost support strengthened, the imported bauxite price center moved up, and the high-level market game continued [SMM Bauxite Weekly Review]

SMM, August 6:

Domestic Bauxite:

Supply Disruptions Push Domestic Ore Prices Up, Overall Rise in Long-Term Contract Purchase Prices for Alumina Enterprises

Due to the impact of the Shanxi coking coal incident, mining at bauxite mines in major production areas such as Shanxi and Henan was slightly disrupted in the short term, leading to temporary changes in bauxite supply. Meanwhile, alumina prices remained at a relatively high level, and alumina enterprises had a moderate tolerance for rising raw material costs, mostly passively accepting current ore prices in the short term. As of today, the EXW price of bauxite with an Al/Si ratio of 5 and 60% alumina content, excluding VAT, at crushing plants in Shanxi was approximately 530-550 yuan/mt; in Henan, the EXW price was around 500-540 yuan/mt; in Guiyang, the EXW price including VAT was 490-540 yuan/mt; and in Guangxi, bauxite with an Al/Si ratio of 6 and 53% alumina content, excluding VAT, at crushing plants was 320-335 yuan/mt.

Imported Bauxite:

High Ocean Freight Rates Combined with Rainy Season Disruptions, August Long-Term Contract Prices Under Continuous Discussion

As of July 31, data showed that total weekly bauxite port departures from major Guinean ports were 3.8703 million mt, up 800,600 mt from the previous week, with a slight rise in shipments. Due to the renewed intensification of the US-Iran situation, oil prices rebounded again, and ocean freight rates from Guinea to China followed with an upward trend, with market quotations rising to around $35/mt, and costs at various mines rising to varying degrees; coupled with Guinea's policy uncertainty and adverse weather affecting transportation, Guinean mines strengthened control over bauxite shipments. In Australia, as of July 31, total weekly bauxite port departures from major Australian ports were 1.0527 million mt, up 4,600 mt from the previous week, with basically flat shipments; future attention is needed on the shipment pace of Australian mines and changes in port departures. As of July 31, China's bauxite port arrivals were 3.8747 million mt, up 1.1144 million mt from the previous week; continuous monitoring is needed for the impact of high and fluctuating oil prices and ocean freight rates on future port arrival pace and landed costs.

In terms of prices, Guinea's bauxite long-term contract quotations for July were between $70-71.5/mt, and August long-term contract prices are still under discussion, but market rumors currently indicate these prices may rise compared to July. Meanwhile, bauxite inventories at China's alumina refineries remained high. This week, these inventories remained relatively stable, with days of inventories of about 94 days, forming certain ceiling pressure on ore prices. For Guinean bauxite, the rebound in transportation costs from Guinea to China, combined with mine cost overlays from shipment reductions driven by the traditional rainy season and bad weather, kept offers from upstream players and traders persistently firm, with slight increases to a high price range of $72-73/mt. China's alumina refineries, impacted by the dual pressures of consistently high inventories and shrinking profits, kept intended transaction prices in the range of $70-71/mt. Serious price divergence existed between upstream and downstream sectors in the bauxite market, with market transactions slowing down and the bargaining stalemate continuing from last week. As of this Thursday, the FOB offer for Guinean bauxite was $38-42/mt, with the average price up $1/mt from last Thursday; the CIF price was reported at $70-74/mt, with the average price up $1/mt from last Thursday; the SMM Imported Bauxite Index price was reported at $71.57/mt, up $0.7/mt from last Thursday. Future bauxite prices will still depend on individual mine cost situations, the impact of Guinea's traditional rainy season and government bauxite export quota policy on overall shipments, and SMM will continue to closely monitor market trends and transaction conditions in the bauxite market.

Overall, domestic ore market prices maintained current levels; meanwhile, bauxite inventories at China's alumina refineries remained high (about 94 days), and the bargaining game between buyers and sellers continued. The uncertainty of Guinea's quota policy, the decline in shipments, and the traditional rainy season also exerted certain upward pressure on bauxite costs. In the short term, due to the dual impact of cost and policy leading to reduced shipments, imported ore prices are expected to continue the pattern of high-level bargaining, and focus should then be on the implementation of Guinea's quota policy and ocean freight rate trends.