Mysteel: Seaborne bauxite prices edge higher, but near-term gains remain capped

Imported bauxite prices in China moved slightly higher last week amid improved activity in the spot market.  No trend-level shift emerged on the supply-demand side. Although rainy-season disruptions and elevated freight rates continued to weigh on Guinea's export volumes, the country's weekly bauxite shipments last week registered both W-o-W and Y-o-Y increases. China's operating alumina capacity edged down sequentially last week yet remained at elevated levels.

On the supply side, some Guinean mines that previously suspended shipments continued to stockpile at ports, and had no plans to resume shipments in the near term. In spite of this, Guinea's bauxite weekly shipments totalled 4.33 million tonnes over Aug 21-27, rising 3.7 per cent week-on-week and 28.4 per cent year-on-year, according to Mysteel data. 

On the demand side, China's operating alumina capacity stood at 99MTPA as of Aug 27, down 0.4 per cent from the prior week but 4.7 per cent higher year-on-year. Inventories at major Chinese ports totalled 32.695 million tonnes as of Aug 28, down 2.5 per cent week-on-week but up 14.1 per cent year-on-year. While no sustained destocking trend has yet emerged, stocks have retreated 5 per cent from the early-July peak.

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Mysteel market surveys indicate that a major Guinean miner has released its September long-term contract offers, with terms broadly unchanged from August. Downstream buyers showed improving willingness to accept the terms, driven by a pullback in international bunker fuel prices, resulting in lower overall CIF levels compared to the previous month, and by high and volatile freight rates that continue to constrain spot shipments from Guinea.

Separately, a medium-sized miner in Guinea's Boffa lowered its August long-term contract offer by USD 1 per dmt to USD 71 per dmt, which was still higher than alumina refineries' target purchase levels, and contract negotiations are still underway.

Recent spot trades pointed to modest upward momentum in Guinea spot bauxite prices. A few standard-grade cargoes were concluded above USD 72 per dmt, a premium driven by the specific quality preferences of some refineries. Most standard-grade spot trades and offers were around USD 71.5 per dmt.

In addition, quotes for ore in transit from some alumina producers appeared in the market last week. Based on their ore consumption and inventory levels, some alumina producers opted to sell their in-transit ore stock at relatively high prices.

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On August 28, Mysteel's daily assessment for Guinea bauxite (Al:45 per cent,Si:3 per cent) was USD 71.5 per dmt, up USD 0.5 per dmt from a week ago. The assessment for Australian bauxite (Al:50 per cent,Si:6.5 per cent) remained flat at USD 66.5 per dmt, while the assessment for Australian bauxite (Al:53 per cent,Si:8.5 per cent) rose by USD 0.5 per dmt to USD 62 per dmt.

Seaborne bauxite market is expected to remain caught between cost support and oversupply in the near term, making significant price fluctuations unlikely.

Note: This news is published under a content and exchange agreement with Mysteel