SMM, August 27:
Domestic bauxite:
Domestic ore supply disruptions continue, mainstream prices remain stable
Affected by the coking coal incident in Shanxi, mining of domestic bauxite in major production areas such as Shanxi and Henan was disrupted to some extent in the short term, leading to periodic changes in ore supply. At the same time, alumina prices remain at relatively high levels, and alumina refineries have moderate tolerance for raw material price increases, mainly passively accepting current ore prices in the short term. As of today, Shanxi bauxite with Al/Si ratio of 5, 60% Al2O3, EXW price at crushing plant excluding VAT is around 530-550 yuan/mt; Henan bauxite with Al/Si ratio of 5, 60% Al2O3, EXW price at crushing plant excluding VAT is around 500-540 yuan/mt; Guiyang bauxite with Al/Si ratio of 6, 60% Al2O3, EXW price including VAT is 490-540 yuan/mt; Guangxi bauxite with Al/Si ratio of 6, 53% Al2O3, EXW price at crushing plant excluding VAT is 320-335 yuan/mt.
Imported bauxite:
Bauxite shipments rebound, buyer’s market leads to slight pullback in imported ore prices
Data as of August 21 show that weekly port departures of bauxite from major Guinea ports totaled 4.1313 million mt, down 557,800 mt from the previous week, with shipments pulling back slightly. International ocean freight rates continued to rise due to strong overall market demand and fierce competition. SMM survey shows that by end-August, the ocean freight from Guinea to China rose to around $36-37/wmt, with shipping costs of various mines consolidating at highs. In Australia, as of August 21, weekly bauxite port departures from major Australian ports totaled 1.1598 million mt, up 59,000 mt from the previous week, with shipments basically flat. Future attention should be on shipment pace of Australian mines and port departure changes. As of August 21, China’s bauxite port arrivals amounted to 4.7505 million mt, down 514,400 mt from the previous week. Continuous attention should be paid to the impact of high and fluctuating oil prices and ocean freight rates on future arrival pace and landed costs.
On the price front, Guinea’s September bauxite long-term contract offers continued to be in the range of $72-74/mt, but downstream price acceptance remains limited. Meanwhile, domestic alumina refineries’ bauxite inventories remain high. This week, bauxite inventories at alumina refineries were relatively stable, with days of inventory around 96 days, exerting some ceiling pressure on ore prices. For Guinean bauxite, while ocean freight rates from Guinea to China maintained an upward trend and mine costs continued to consolidate at highs, Guinea’s overall bauxite shipments stayed high in August. Domestic alumina refineries kept their target purchase prices low at $70-71/mt, and overall imported ore prices pulled back slightly to the $71-72/mt range. Shipments from various mines in Guinea recovered somewhat, and imported ore prices continued to be contested, but transaction activity improved. Two deals were recently concluded: one cargo of 45/3 Guinean ore traded at $71.5/mt CIF China, and one cargo of 54/6 Turkish ore traded at $71.5/mt CIF south China port. As of Thursday this week, Guinean bauxite FOB prices were quoted at $36-44/mt, with the average price unchanged WoW. Guinean bauxite CIF prices were quoted at $70-73/mt, with the average price also flat WoW. The SMM Imported Bauxite Index stood at $71.75/mt, down $0.24/mt from last Thursday. Bauxite prices going forward will depend on individual mine costs, the impact of Guinea’s traditional rainy season and the government’s bauxite export quota policy on overall shipments. SMM will continue to follow bauxite market trends and transaction activity closely.
Overall, domestic ore prices held at current levels. Meanwhile, domestic alumina refinery inventory remained high at around 96 days, while the battle over offers and bids between buyers and sellers persisted. Uncertainty over Guinea’s quota policy and the traditional rainy season provided some support to bauxite costs, but waning buyer purchase willingness and recovering shipments added downward pressure on imported bauxite prices. In the near term, after the slight pullback, imported ore prices are expected to remain in a standoff pattern. Close attention should then be paid to how Guinea’s quota policy plays out and to ocean freight rate movements.
