Fallout from Malaysian ban continues as authorities step up bauxite export licence checks

Fallout from Malaysian ban continues as authorities step up export licence checks. CBIX edged lower again last week, down 1.8% (US$0.9) to finish at US$46.6/dmt. The fall was more reflective of the subdued alumina market, particularly in China, than the longer term implications of the Malaysian ban.

Adding to the disruptions in Malaysia, authorities engaged in brief but intense process of export licence checks, delaying shipments and leading to serious congestion at the port (vessels were queued as they awaited loading). The disruptions are reportedly affecting buyers, with some avoiding Malaysian bauxite purchases altogether, as they wait for the authorities to provide more policy clarity.

Malaysian bauxite prices remained unchanged over the week, with unwashed bauxite fetching US$26.0/dmt FOB. The calculated CFR price (ViU adjusted) fell marginally, by 0.6% (US$0.2/dmt), to US$34.9/dmt, reflecting changes in freight rates.

Chinese domestic alumina prices edged lower in the north, with the North China domestic alumina price down 0.6% (RMB10/t) to RMB1,627/t (US$247/t including VAT), but remained unchanged in the south, at RMB1,535/t (US$233/t including VAT).

Despite a small increase in bunker prices, Panamax freight rates fell slightly, due to lower vessel charter rates, while Capesize freight rates edged higher on both the fuel price increases and slightly higher charter rates. Freight rates for both vessel classes remain at historically low levels.