Bauxite supply constraints affect China's alumina sector
China's alumina market is under pressure at the moment. Supply of bauxite from local mines remains difficult. The authorities are controlling the amount of explosives that can be used to unlock the ore. As well, some mines have not been successful in getting mining permits. Imported ore is also problematic.
In addition to the ore problems for some refineries, other refineries have been down for maintenance, so the supply of finished products has been limited as well. (If all that idled capacity had been operational, the ore shortage would have been worse.)
These difficulties on the supply side have led producers to take a hard line on prices. However, the market is not accepting this, and smelters are putting pressure on refineries to lower their prices.
Our Zibo team expects the situation to right itself in the coming weeks. The authorities have slowly released permits, but this should soon clear. Guinea is increasing the volume of exports, and some refineries are beginning to return to full capacity.
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