Under persistently high ocean freight rates, the imported bauxite market remains in a standoff [SMM Bauxite Weekly Review]

SMM, August 27:

Domestic bauxite:

Domestic ore supply disruptions persist, mainstream prices stay stable

Domestic ore prices are currently stable overall with no notable fluctuations, and the market is expected to trade around current price levels in the near term. As of today, Shanxi bauxite with an Al/Si ratio of 5.0 and 60% alumina content is trading at EXW prices of 530-550 yuan/mt, VAT-exclusive, from crushing plants; Henan bauxite with an Al/Si ratio of 5.0 and 60% alumina content is trading at EXW prices of 500-540 yuan/mt, VAT-exclusive, from crushing plants; Guiyang bauxite with an Al/Si ratio of 6.0 and 60% alumina content is trading at EXW prices of 490-540 yuan/mt, VAT-inclusive; Guangxi bauxite with an Al/Si ratio of 6.0 and 53% alumina content is trading at EXW prices of 320-335 yuan/mt, VAT-exclusive, from crushing plants.

Imported bauxite:

Bauxite shipments remain steady, high ocean freight rates consolidate and slightly push ore prices higher

According to data from August 30, weekly bauxite port departures from main ports in Guinea totaled 4.9904 million mt, up 859,100 mt from the previous week, with shipments rebounding. Ocean freight rates continued to rise due to higher shipments and fewer bulk vessels. According to an SMM survey, Guinea-to-China ocean freight rates rose to $39-41/dmt in early September, and shipping costs at various mines stayed high. In Australia, as of August 30, weekly bauxite port departures from main ports totaled 769,600 mt, down 390,200 mt from the previous week, with shipments pulling back slightly. Attention should be paid to the shipment pace of Australian mines and changes in port departures. As of August 30, China's bauxite port arrivals totaled 4.3801 million mt, down 370,400 mt from the previous week. Continued attention should be paid to the impact of high oil prices and ocean freight rate fluctuations on forward arrival pace and landed costs.

In terms of prices, Guinea bauxite long-term contract offers for September continued to land in the $72-74/mt range, and downstream price acceptance remains limited. Meanwhile, alumina prices are still at a relatively high level, with days of inventories at around 95 days, putting some top-side pressure on ore prices. For Guinea bauxite, although Guinea-to-China ocean freight rates maintained an upward trend and mine costs stayed high, Guinea maintained high bauxite shipment volumes overall in August. Domestic alumina refineries' intended purchase prices stayed at a low of $70-71/mt, and overall imported ore prices pulled back slightly to the $71-72/mt range. Shipments from various mines in Guinea have recovered somewhat, and imported ore prices remain in a tug-of-war, but transaction activity has improved. As of Thursday this week, FOB quotes for Guinean bauxite were $35-45/mt, with the average price flat WoW; CIF prices for Guinean bauxite were quoted at $70-73/mt, with the average price flat WoW; the SMM imported bauxite index price was quoted at $72/mt, up $0.25/mt WoW. Going forward, bauxite prices will still depend on cost conditions at individual mines, the traditional rainy season in Guinea, 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 activity.

Overall, domestic ore market prices held at current levels; meanwhile, alumina refinery inventories in China remained high (around 95 days), and alumina enterprises' tolerance for rising raw material prices was moderate; uncertainty over Guinea's quota policy and the traditional rainy season also provided some support to bauxite costs, but buyers' purchase willingness and the recovery in shipments put downward pressure on imported bauxite prices. In the short term, imported ore prices are expected to continue their tug-of-war after pulling back slightly, with attention then focused on the implementation of Guinea's quota policy and ocean freight rate trends.