SHANGHAI, Jan 11 (SMM) - Customs data showed that China imported 11.79 million mt of bauxite in November, up 31% MoM and 53% YoY. The imports totalled 115.4 million mt from January to November, a year-on-year increase of 16.9%. Imports from Guinea hit a record high of 7.28 million mt, up 65% month-on-month and 125% year-on-year; imports from Australia were 2.84 million mt, down 14% month-on-month and up 7% year-on-year; imports from Indonesia were 1.36 million mt, up 28% MoM and down 25% YoY. New suppliers emerged, including Turkey, Ghana, Montenegro, Jamaica, Iran, Côte d'Ivoire, and Russia.
The main reasons for the surge in imports from Guinea were as follows: (1) Since rumours began to circulate at the end of December 2021 that Indonesia would ban bauxite exports, Chinese alumina refineries have favoured Guinean ore as an alternative. (2) As the year was about to end, alumina refineries who use Guinean ore began to stock up on ore that would sustain 2-3 months of production. (3) Mines in Guinea ramped up their production and exports to China to take advantage of the supply void following decline in exports from Indonesia. (4) Mining activities and shipments in Guinea gradually recovered after the rainy season ended. Imports from Guinea look set to recover further in the future.
Imports from Australia witnessed relatively small changes in the whole year of 2022 as supply and demand were in a dynamic balance.
Imports from Indonesia were mostly driven by long-term contracts signed previously. On December 21, Indonesian President Joko Widodo announced that the export of bauxite would be banned from June 2023 in order to promote the development of the country's own bauxite processing industry. SMM believes that Indonesia's export ban will have limited impact on bauxite supply for the following reasons. (1) From January to November 2022, Indonesia accounted for merely 15.6% of China’s total bauxite imports. After Indonesia’s export ban comes into effect, ore from other countries will fill in the supply gap. (2) Bauxite suppliers all over the world are trying to grab some market share in China, who is the world's largest bauxite buyer. Ore from Montenegro, Malaysia, Solomon, and Jamaica, among other countries, has emerged as new substitutes. (3) Indonesia’s export ban is aimed at boosting local alumina production. At present, two Chinese giants, Nanshan Aluminium and Weiqiao Group, have alumina projects in Indonesia, with a combined capacity of 4 million mt/year. Chinese enterprises will ship their alumina produced in Indonesia back to China, thus the domestic alumina supply will not suffer a great shock. (4) Major Chinese companies, such as Weiqiao, Chinalco, State Power Investment Corporation, are developing bauxite mines in Guinea. In 2023, bauxite supply in Guinea will maintain growth. From a global perspective, bauxite supply will be in a surplus, especially in Guinea.
The domestic bauxite supply has little room to grow, while new alumina capacity will continue to be put into operation, boosting the demand for imported ore. With more suppliers emerging in the bauxite market, supply stability will improve in the future so as to meet China’s voracious demand. Hence, the impact of Indonesia's export ban will be diluted. Alumina refineries will need cheaper bauxite to improve their poor profit margins. If alumina prices remain weak while bauxite prices stay high, alumina refineries will have to curtail their production so as to prevent their losses from expanding, which will put downward pressure on bauxite prices.