SMM News on July 30:
Domestic Bauxite:
Supply Disruptions Drive Up Domestic Ore Prices; Alumina Refineries' Long-Term Contract Procurement Prices Rise Overall
Affected by coking coal-related incidents in Shanxi, mining activities in major domestic bauxite producing areas like Shanxi and Henan have been somewhat disrupted in the short term, leading to phased changes in ore supply. Meanwhile, alumina prices remain at relatively high levels, and alumina refineries have a moderate tolerance for rising raw material costs, mostly accepting current ore prices passively in the near term. As of today, the EXW price, excluding VAT, at crushing plants for bauxite with an Al/Si ratio of 5.0 and 60% alumina content in Shanxi is approximately 530-550 yuan/mt; in Henan, the EXW price for similar bauxite is around 500-540 yuan/mt; in the Guiyang area, the EXW price, including VAT, for bauxite with an Al/Si ratio of 6.0 and 60% alumina content is 490-540 yuan/mt; and in Guangxi, the EXW price, excluding VAT, for bauxite with an Al/Si ratio of 6.0 and 53% alumina content is 320-335 yuan/mt.
Imported Bauxite:
Ocean Freight Rates Fluctuate at Highs; August Long-Term Contract Prices Yet to Be Settled; Imported Bauxite Market Remains in a State of Continued Negotiation
According to data from July 24, total weekly port departures of bauxite from major ports in Guinea were 3.0697 million mt, up 237,700 mt from the previous week, with shipments edging up slightly. As US-Iran tensions intensify again, oil prices have rebounded, and ocean freight rates from Guinea to China have followed suit with a rising trend, with market quotations reaching around $35/mt, driving up mine costs to varying degrees. Coupled with policy uncertainties in Guinea and weather-related transport disruptions, Guinean mines are tightening control over bauxite shipments. In Australia, as of July 24, total weekly bauxite port departures from major Australian ports were 1.0481 million mt, up 326,800 mt from the previous week, with shipments rising slightly; the future pace of shipments from Australian mines and changes in port departures require further attention. As of July 24, China's bauxite port arrivals stood at 2.7603 million mt, down 1.9029 million mt from the previous week. Continued attention is needed on the impact of high and fluctuating oil prices and ocean freight rates on future arrival pace and landed costs.
In terms of prices, Guinean bauxite long-term contract offers for July are in the range of $70-71.5/mt, while August long-term contract prices are still under negotiation. Meanwhile, bauxite inventories at domestic alumina refineries remain at high levels. This week, alumina refinery bauxite inventories were relatively stable, with days of inventories at about 94 days, exerting some downward pressure on ore prices. As for Guinean bauxite, with the rebound in Guinean-to-China transportation costs, mine costs, plus shipment reductions caused by the traditional rainy season and adverse weather, upstream and trader offers remained firm and held steady in the high price range of $70-72/mt. Due to persistently high inventory at domestic alumina refineries and shrinking profits, the intended transaction price dropped to $70/mt or lower. The upstream and downstream bauxite market saw significant price divergence, with transaction activity slowing down, and the tug-of-war continued from the previous week. As of Thursday this week, Guinean bauxite FOB quotes were $38-40/mt, with the average price unchanged from the previous Thursday; CIF prices were reported at $69-73/mt, with the average up $0.5/mt from the previous Thursday; the SMM Imported Bauxite Index stood at $70.87/mt, up $0.51/mt from the previous Thursday. Future bauxite prices will still depend on mine cost conditions, Guinea’s traditional rainy season, 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 transactions.
Overall, the domestic ore market price maintained the current level; meanwhile, inventory at domestic alumina refineries remained high (about 94 days), and buyers and sellers continued to bargain over offers. Uncertainty over Guinea’s quota policy, declining shipments, and the traditional rainy season also exerted some upward pressure on bauxite costs. In the short term, as shipment volumes decline due to both costs and policy factors, imported ore prices are expected to maintain their high-level tug-of-war pattern. Afterwards, close attention should be paid to the implementation of Guinea’s quota policy and the trend in ocean freight rates.
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