BLACK CHINA BLOG

19
June

Bauxite supply to be diversified in future

By: June Wang | Comments: 0 | Category: Aluminium AZ China Bauxite and Alumina Environment

China’s appetite for bauxite and alumina is still growing, so it’s interesting to see what has happened since the days of Indonesia’s ban and the unlikely rise of Malaysia.   Guinea has now risen to be the big mover, replacing both countries.    For Weiqiao (also known as Hongqiao), they seem to have the supply problem solved for now, but it’s a broader question than for just one customer.

According to Customs data to April, volumes of bauxite imported to China increased by 9% y/y. Among them, Australia’s contribution kept 20% positive growth but Guinea rose sharply. Market share of Southeast Asia continued to shrink after Malaysia’s export ban. However, with the exception of Xinfa which expanded in 2016, imported volumes of main buyers all presented decreases (Yantai Jintai always supplied bauxite to Nanshan).

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It’s a critical question for Chinese smelters.  How to ensure the normal operation when China is shortn ready supplies of bauxite?  The answer is to keep searching and finding other sources of supply. Lubei Alumina as a major alumina refiner has signed a long-term contract with Australia Metro and resumed the imported business with Indonesia. In addition, the restart of Qixing aluminium will boost the import of Malaysia bauxite. As for Nanshan and Chalco, Australia and Brazil might be the best choice.

Turing to domestic market, it also met multiple problems. Since April to now, mining business of coal, bauxite and fluoride were forced to control because of stringent environmental inspection. Shanxi province as one of the major three bauxite supplying regions has signaled insufficient output with purchasing price up. The local government is still carrying out rigorous inspections and there was no signal indicating mining business to resume activity. Although alumina price rally fast after the curtailment of Chalco, the operating rate didn’t resume at the meanwhile.

Overall, there is supply gap of bauxite either in the domestic market or imported products. As for latter, the market will be more diversified in spite of Guinea becoming the dominant player.

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