SMM expects new environmental rules to lift up the current flat bauxite market in China

Bauxite prices in China have been flat for about two months now. Mining operations in major bauxite-producing regions Shanxi and Guizhou were mostly suspended in May as the central government ramped up anti-pollution measures in these regions. There was no high demand due to the upcoming alumina capacity cut in Beijing during winter.

The below table shows the current Prices of bauxite in the popular Chinese provinces:

But, SMM experts expect the new environmental regulations to lift up bauxite prices in China.  On June 13, China’s Ministry of Environmental Protection issued revised document on aluminium industry pollutant discharge standard and sought public opinion on the same.

The new standard directs crushing plants to crush and sort bauxite in airtight buildings and install de-dusting equipment. The new rules are expected to be implemented in Beijing, Tianjin, and 26 smaller cities in the Beijing-Tianjin-Hebei region and nearby areas, from October 1, 2017. These are the key regions for environmental protection in China.

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The last round of environmental inspections hit the operations of the bauxite crushing plants in Shanxi and Henan, two of the major bauxite producing provinces.  This, along with alumina producers’ growing demand for bauxite drove bauxite prices high in Henan since the beginning of this year. According to an SMM insight, bauxite suppliers in Shanxi, Guizhou and Guangxi are still shipping bauxite to Henan.

Bauxite supply in Henan remains tight despite continuous shipping by the domestic companies.  SMM expects bauxite prices in domestic market to stay high in future due to tight supply caused by strict environmental rules.