CBIX flat, alumina tight in expectation of another moratorium extension in Malaysia

<p>CBIX largely flat (up 0.5% to US$45.7/dmt) with some higher Value-in-Use (ViU) priced cargos from Ghana and Australia offset by lower ViU-priced material from South America.<br /><br />Malaysia&rsquo;s Minister for Natural Resources and Environment, Datuk Seri Dr Wan Junaidi Tuanku Jaafar was quoted in the Malaysian Reserve on 20th October as saying the bauxite mining ban in Pahang (Kuantan) could be further extended, stating that, as long as stockpiles remained, the ban would stay. Dr Wan Junaidi claimed 4.15 million tonnes of material still needed to be cleared, and 38 special approval permits (AP) had been issued to clear the bauxite, but these had not been fully utilised. He further stated the issuance of APs has been carefully controlled to avoid any one party monopolising the situation.<br /><br />Dr Wan Junaidi also disclosed new guidelines/rules and operating procedures for bauxite mining and export had been formulated and approved at ministry level. The Minister&rsquo;s ultimate goal was to make &ldquo;Kuantan free from bauxite pollution&rdquo;.<br /><br />{googleAdsense}<br /><br />CM&rsquo;s own analysis estimates bauxite stocks at closer to 1.5 million tonnes. Even at this level, a significant lift in Kuantan exports over the remaining two months of 2016 would be required for stocks be cleared. Prices in Kuantan were unchanged, with unwashed material fetching US$27/dmt FOB and washed material at US$39/dmt FOB.<br /><br />Chinese alumina prices have plateaued for the moment, with the north price unchanged (RMB3/t lower) at RMB2,530/t and the south (which normally lags the north) up 2.1% (RMB50/t) to RMB2,425/t. However, the domestic market remains tight, with smelters still seeking to build stocks, as primary Al production ramps up to take advantage of higher prices. We expect prices could still push higher from here, although alumina production is also ramping up, suggesting prices may not have much headroom. Australian FOB alumina prices have followed Chinese prices higher, reportedly rising to over US$280/t.<br /><br />Capesize vessel timecharter rates fell again and, despite slight increases in bunker (fuel) prices, the overall Guinea-Shandong capesize freight rate fell 7.5% (US$1.1/wmt) to US$13.1/wmt. Panamax vessel timecharter rates increased which, when combined with the bunker price rise, lifted the North Australia to Shandong route rate 6.4% (US$0.3/wmt) to US$5.7/wmt.</p>