CBIX up, alumina up, cape rates up and more Chinese refinery capacity for Indonesia

CBIX was up 2.7% (US$1.3/dmt) on the back of high Value-in-Use (ViU) cargos from Australia and Brazil and the absence of any lower ViU cargos (e.g. from Malaysia) to counter-balance. Although Malaysian prices remain unchanged (US$27.5/dmt FOB un-washed and US$39.5/dmt FOB washed), an increase in exports over the remainder of 2016 is likely, as two more mining companies have cleared all approval hurdles to re-commence clearing their stockpiles. This increase is potentially tempered by the rainy season, with December historically the wettest month.

Domestic alumina prices ratcheted up again in China, with the northern price up 2.4% (RMB63/t) to RMB2,763/t and the southern price up 2.5% (RMB65/t) to RMB2,665/t. Driven by higher aluminium prices, a tight situation between alumina supply and demand still remains, with smelter restarts and ramp-ups proceeding at similar rates to refinery capacity restarts and rump-ups. The situation continues to be compounded by transport tightness due to the crackdown on truck overloading and, as an additional impediment, the first snow of the season has made transport into and out of Xinjiang more difficult.

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Following its successful Phase I commissioning (1 MTPY), Weiqiao’s JV refinery in Indonesia is set to commence construction of Phase II (an additional 1 MTPY), announced last week, with first alumina scheduled for Q1 2018.

Capesize freight rates on the Guinea-Shandong route were up 8.2% (US$1.0/wmt) to US$12.7/wmt after a rebound in vessel timecharter rates. Bunker (ship fuel) prices edged lower, but were balance by a marginal increase in panamax vessel timecharter rates to leave freight rates on the North Australia to Shandong route flat at US$5.5/wmt.