High ocean freight rates coupled with rainy season disruptions, imported ore prices remain in high-level tug-of-war

Stock image for referential purposes only

Domestic ore supply disruptions linger, mainstream prices remain stable

Affected by coking coal-related events in Shanxi, mining at domestic bauxite main producing areas such as Shanxi and Henan was somewhat disrupted in the short term, and ore supply showed phased changes. Meanwhile, alumina prices remained at relatively high levels, and alumina enterprises had moderate tolerance for rising raw material prices, mainly passively accepting current ore prices in the short term.

As of today, in Shanxi, VAT-exclusive EXW transaction prices at crushing plants for bauxite with an Al/Si ratio of 5 and 60 per cent alumina content were around RMB 530-550 per tonne; in Henan, VAT-exclusive EXW transaction prices at crushing plants for bauxite with an Al/Si ratio of 5 and 60 per cent alumina content were around RMB 500-540 per tonne; in Guiyang, VAT-inclusive EXW prices for bauxite with an Al/Si ratio of 6 and 60 per cent alumina content were RMB 490-540 per tonne; in Guangxi, VAT-exclusive EXW transaction prices at crushing plants for bauxite with an Al/Si ratio of 6 and 53 per cent alumina content were RMB 320-335 per tonne.

Imported Bauxite:

August contract prices raised slightly, imported ore price divergence between upstream and downstream intensifies

Data as of August 7 showed that total weekly port departures of bauxite at main ports in Guinea were 4.5611 million tonnes, up 690,800 tonnes from the previous week, with shipments higher. As US-Iran tensions heated up again, oil prices rebounded, and ocean freight rates from Guinea to China showed an upward trend, with market quotes rising to around USD 35 per dmt; costs at various mines also increased to varying degrees.

Coupled with policy uncertainty in Guinea and transport affected by severe weather, mines in Guinea tightened control over bauxite shipments. In Australia, as of August 7, total weekly port departures of bauxite at main Australian ports were 926,700 tonnes, down 126,000 tonnes from the previous week, with shipments basically flat.

Going forward, attention should be paid to the shipment pace of Australian mines and changes in port departures. As of August 7, China's bauxite port arrivals were 5.2267 million tonnes, up 1.352 million tonnes from the previous week. Continuous attention should be paid to the impact of elevated and fluctuating oil prices and ocean freight rates on future port arrival pace and landed costs.

Price-wise, Guinea's August bauxite long-term contract prices rose slightly compared with July, settling at USD 73-74 per tonne, but downstream price acceptance was relatively limited. Meanwhile, bauxite inventories at alumina refineries in China remained high.

This week, alumina refinery bauxite inventories were relatively stable, with days of inventories at around 96 days, capping ore prices to some extent. For Guinean bauxite, with transportation costs from Guinea to China rebounding and shipment reductions caused by the traditional rainy season and severe weather adding to mine costs, offers from upstream sellers and traders remained firm and edged up slightly to a high price range around USD 73 per tonne; at Chinese alumina refineries, under the combined impact of persistently high inventory and shrinking margins, intended transaction prices held at USD 70-71 per tonne; upstream and downstream participants in the bauxite market diverged sharply on prices, transactions slowed, and the standoff carried over from last week.

As of this Thursday, Guinean bauxite FOB quotes were USD 38-42 per tonne, with the average price unchanged from last Thursday; Guinean bauxite CIF prices were USD 70-74 per tonne, with the average price unchanged from last Thursday; the SMM imported bauxite index price stood at USD 71.72 per tonnes, up USD 0.15 per tonne from last Thursday. Going forward, bauxite prices will still depend on cost conditions at individual mines, the traditional rainy season in Guinea, 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 transaction activity.

Overall, domestic ore prices held at current levels; meanwhile, inventory at Chinese alumina refineries remained high (about 96 days), and the bid-offer standoff between buyers and sellers continued; uncertainty over Guinea's quota policy, lower shipments, and the traditional rainy season also put some upward pressure on bauxite costs. In the short term, with shipments reduced by the dual impact of costs and policy, imported ore prices are expected to continue their high-level standoff pattern; afterward, close attention should be paid to the implementation of Guinea's quota policy and ocean freight rate trends.

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