Bauxite prices CIF China climbed up to US$48.3/dmt, due to high priced Australian bauxite

<p>Bauxite prices CIF China climbed over the week, with CBIX up 2.1% (US$1.0/dmt), closing at US$48.3/dmt, on the back of higher priced bauxite from Australia. The absence of lower ViU-priced cargos from Malaysia continues to have a positive impact on the CBIX price, although we expect CBIX prices to be affected by Malaysia&rsquo;s return. In the meantime, sentiment remains positive, with the prospect of high grade LT bauxite prices increasing over the coming weeks.<br /><br />Malaysian FOB prices remain unchanged at US$26/dmt (unwashed, non ViU-adjusted) ahead of the ban being lifted, and washed material quoted at US$38/dmt FOB(CBIX US$42.3/dmt), inline with pre-ban prices. Developments in Guinea continue at breakneck speed, with the WAP/SMB joint venture moving closer to completing construction of its second barge loading facility, while at the same time continuing to export bauxite at an annualised rate of around 18 MTPY (wet). The rise of Guinea has come at the expense of India, which has now all but exited the bauxite export market, given its structurally higher cost base.<br /><br />China&rsquo;s domestic bauxite prices have come off over recent months, in line with downward movement in alumina prices during H1. Quoted prices last week for bauxite originating in Shanxi with A/S ratio 5.5 were RMB270-280/dmt (US$42/dmt excluding VAT) delivered to the refinery.<br /><br />Chinese domestic alumina prices continue to rise, with prices higher by 2.2% (RMB41/t) in the North over the week to RMB1,887/t (US$283/t including VAT) and the South up 1.1% (RMB20/t) to RMB1,850/t (US$277/t including VAT). As reported last week, the rises have been due to some tightness in the market as a result of supply disruptions and refinery production cutbacks. However, smelter restarts in China, estimated at around 1 MTPY over the past month (with more to follow) are also starting to have an impact on prices. Our view remains the market lacks the fundamental drivers necessary to induce a structured price rally, although we can see some tailwinds continuing over the next few months.<br /><br />Increased charter rates and steady fuel prices led to higher capesize freight rates, with the Guinea to Shandong rate edging up 4% (US$0.4) to US$10.6/wmt. Panamax charter rates were lower, with the North Australia to Shandong rate down 2% (US$0.1) to US$4.8/wmt.</p> <p><img style="vertical-align: middle; display: block; margin-left: auto; margin-right: auto;" src="http://www.alcircle.com/uploads/images/bauxite%205.9.16.png" alt="News" width="620" height="421" /></p>