SHANGHAI, June 14 - The supply of bauxite mines has been tightened since last year and was in serious shortage this month, affecting the production of some alumina plants.
The overall domestic ore supply was tight this year
Due to the tight supply of domestic ores, plants in Shanxi and Henan had to purchase imported ores to ensure the production. Meanwhile, some plants in Guizhou struggled to maintain production by purchasing imported ores at high prices amid the tight local supply caused by the unfinished safety inspections. The current domestic ore supply was even tighter mainly because the alumina plants that originally used Indonesian ores rushed to buy domestic ores as Indonesia once again announced a ban on the ore export. In this case, it was more difficulty to purchase domestic ores without supply increased.
The domestic bauxite grade declined after many years of consumption
With the production and development of the domestic alumina industry for more than 20 years, the domestic bauxite consumption was huge, and the high-quality ore was increasingly rare. Although the ore with low Al/Si ratio and low alumina content is usable theoretically, its energy, alkali and lime consumption in the production process are much higher than those of high-quality ore. Therefore, the usage of the low-quality ores increased the production of caustic soda and the purchase price of caustic soda in Shanxi and Henan areas rose by 300 yuan/mt. As the plants rushed intensively to buy high-quality ores due to the decline of alumina prices and the poor profits, the high-quality ore prices rose high and the supply continued to tighten.
The ore prices were easy to rise and hard to fall amid the tight supply
The supply of bauxite mines has been tightened since last year and the current supply was even tighter mainly because the alumina plants that originally used Indonesian ores rushed to buy domestic ores as Indonesia once again announced a ban on the export of ore. In this case, it was more difficulty to purchase domestic ores without supply increased. In addition, with the production and development of the domestic alumina industry for more than 20 years, the domestic bauxite consumption was huge, and the high-quality ore was increasingly rare. Although the ore with low Al/Si ratio and low alumina content is usable theoretically, its energy, alkali and lime consumption in the production process are much higher than those of high-quality ore. Therefore, the usage of the low-quality ores increased the production of caustic soda and \ the purchase price in Shanxi and Henan areas rose by 300 yuan/mt. As the plants rushed intensively to buy high-quality ores due to the decline of alumina prices and the poor profits, the high-quality ore prices rose high and the supply continued to tighten.
To sum up, the gap of purchase ability, cost control and operation capabilities between alumina plants expanded and some plants reduced the production amid the shortage of domestic ores, the increasing difficulty of spot procurement of overseas ores, and the increase in domestic and overseas ore prices. In the short term, the ore prices will rise stably amid the tight supply and increasing demand.
