Ocean freight rates rebound as indicative prices for imported bauxite fall; market trading stabilises

Bauxite prices are rising slightly in some regions. The domestic mineral market remains generally stable. Domestic ore supply remains tight, with a slight increase in bauxite prices in Shanxi. No significant price fluctuations have been reported in other regions, and overall stability is expected in the short term around current levels.

As of today, Shanxi bauxite with an Al/Si ratio of 5.0 and 60 per cent alumina, excluding VAT, at crushing plant warehouses, was trading at approximately RMB 540-560 per tonne. Henan bauxite with an Al/Si ratio of 5.0 and 60 per cent alumina, excluding VAT, at crushing plant warehouses, was trading at approximately RMB 500-540 per tonne.

Guiyang bauxite with an Al/Si ratio of 6.0 and 60 per cent alumina, priced ex-works including VAT, was RMB 510-560 per tonne, RMB 20 per tonne higher than in the previous period. Guangxi bauxite with an Al/Si ratio of 6.0 and 53 per cent alumina, priced ex-works excluding VAT, was traded at RMB 320-335 per tonne at crushing plant warehouses. Overall, domestic ore prices have upward momentum, but alumina profitability remains mediocre, and price volatility is expected.

Attention should be paid to the recovery of supply at mines in major producing areas and to changes in purchasing patterns by intermediate consumers.

Imported bauxite

Maritime freight rates from Guinea to China rise; indicative prices for imported bauxite fall slightly; market transactions stabilise.

According to data from October 30, weekly bauxite outflows from Guinea's main ports totaled 3.917 million tons, 561,000 tons higher than the previous week, reflecting a slight increase in shipments. Currently, the main long-term contract prices from Guinea to China for November are trading around USD 72 per tonne, with ocean freight base rates USD 6-7 lower, which is pulling market prices down. As for Australia, as of October 30, weekly bauxite outflows from major Australian ports totalled 1.226 million tonnes, 79,000 tons lower than the previous week, with shipments essentially stable.

Attention should be paid to the pace of shipments from Australian mines and changes in port outflows. As of October 30, bauxite arrivals at Chinese ports totalled 4.581 million tonnes, down 570,000 tons from the previous week. Continued attention should be paid to the impact of high and fluctuating oil prices and ocean freight rates on the pace of future arrivals and unloading costs.

Regarding prices, the sharp decline in ocean freight rates has led alumina refineries to continually lower their ore price expectations.

However, with ore costs still high, upstream mines have not significantly reduced their price expectations. Market volatility is expected to persist, although the overall center of this volatility has shifted slightly. November prices for Guinea's long-term contracts showed declines compared to October quotes, with lower ocean freight rates accounting for a large part of this, reflecting the increasing importance of ocean freight in the cost structure of the imported bauxite market. Meanwhile, no news has emerged regarding the 2027 long-term annual contracts due to the volatility of ocean freight rates.

At the same time, rumours have circulated in the market regarding policies related to Guinea's bauxite exports, but no official clarification has been issued so far, and further information is needed in November for more in-depth analysis. Similarly, alumina refineries maintained bauxite inventory days at around 94 days, and high inventory levels continued to exert some downward pressure on ore prices. Regarding Guinean bauxite, C3 ocean freight showed a rebound trend, and Guinea-China freight overall rose back to the USD 35-38 per tonne range, which put some pressure on ore prices.

However, as freight capacity prices fell to the USD 30-35 per tonne range during October, some market participants signed long-term freight capacity contracts for the fourth quarter, and a short-term recovery in shipments is expected in November. During periods of sharp freight fluctuations, the market became more cautious in bauxite trading, but imported bauxite still changed hands at northern ports within the USD 71-USD 72 per tonne price range. As of Thursday, FOB prices for Guinean bauxite ranged from USD 33-43 per tonne, with the average price USD 2 per tonne lower than the previous period.

CIF prices for Guinean bauxite were reported at USD 70-72 per tonne, with the average price USD 0.25 per tonne lower than the previous period. The SMM Imported Bauxite Index price was reported at USD 71.68 per tonne, USD 0.55 per tonne lower than the previous period.

Going forward, bauxite prices will continue to depend on cost conditions at each mine, freight capacity, and the impact of the Guinean government's bauxite export quota policy on overall shipments. SMM will continue to closely monitor bauxite market trends and trading conditions.

Overall, bauxite prices are expected to see intense trading between buyers and sellers in the short term. On the one hand, domestic alumina refineries maintain relatively large raw material inventories and their profitability is mediocre, limiting their tolerance for sharp increases in raw material prices. On the other hand, uncertainty surrounding Guinea's quota policy, rising ocean freight rates, and insufficient loading capacity also provide some support for bauxite costs. Going forward, close attention should be paid to the implementation of Guinea's quota policy, loading capacity conditions, and ocean freight rate trends.

Note: This article has been shared by SMM and has been published by AL Circle with its original information without any modifications or edits to the core subject/data.