SMM June 11 News:
In the past two weeks, the impact of the Guinea mining rights incident on market sentiment for alumina and bauxite has gradually subsided, and transactions in the bauxite bulk cargo market have been relatively sluggish. Bauxite prices are currently in a tug-of-war between sellers and buyers, with both bearish and bullish factors coexisting, and price trends await guidance.
Bauxite sellers intend to refuse to budge on prices
Recently, bauxite sellers have maintained their offers above $75/mt. Considering the upcoming rainy season in Guinea and the unresolved mining rights incident, bauxite shipments are expected to decrease, and sellers have a certain intention to refuse to budge on prices.
According to data from June 6, the total weekly bauxite port departures from Guinea's main ports were 3.5693 million mt, an increase of 395,500 mt from the previous week. From the perspective of weekly average port departures, the average weekly port departures from Guinea's mainstream ports were 3.86 million mt in April and 3.6 million mt in May (5 weeks). Recently, Guinea's weekly bauxite port departures have decreased from the high levels seen in March-April. As the impact of the rainy season gradually manifests, weekly port departures are expected to decline further, and the monthly balance of bauxite may shift to a deficit state.
Buyers have limited acceptance of high-priced bauxite
On the one hand, the bauxite market has recently shown a continuous surplus. Supply side, bauxite port arrivals have remained at high levels recently, with an average of 4.48 million mt per week in April (5 weeks) and 4.45 million mt per week in May. In the first week of June, port arrivals reached 4.82 million mt. Demand side, from April to May, affected by maintenance and production cuts at domestic alumina refineries, alumina production declined, reducing the demand for bauxite. Bauxite has remained in a continuous surplus. As of last Friday, SMM statistics showed that the combined inventory at nine ports was 21.2 million mt, an inventory buildup of 5.14 million mt from the end of March. Based on a simple calculation of last week's alumina operating capacity and bauxite supply, the weekly demand for bauxite is estimated to be around 4.5 million mt, while the combined supply of imported bauxite arrivals and domestic ore production is expected to be close to 6 million mt, resulting in a weekly bauxite surplus of over 1 million mt.
On the other hand, the profitability of alumina is not optimistic. Starting from the end of May, the SMM alumina index has stopped rising and pulled back. Some high-cost alumina capacities in Shanxi, Henan, and Guangxi are expected to remain in a loss-making state. Alumina refineries have not yet achieved 100% profitability and are once again facing pressure from narrowing profits and increasing losses. It is expected that alumina refineries will be unable to accept high-priced bauxite in the short term.
SMM Commentary: Since mid-May, bauxite transaction prices have shown mixed performance. During the game phase, the SMM imported bauxite index price is expected to fluctuate.
