Mysteel: Seaborne bauxite prices rise further on elevated costs

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On August 12, Mysteel's daily assessment for Guinea bauxite (Al:45 per cent,Si:3 per cent) was USD 71 per dmt, up USD 1.5 per dmt from a month ago. The assessment for Australian bauxite (Al:50 per cent,Si:6.5 per cent) rose by USD 2.5 per dmt M-o-M to USD 66.5 per dmt.

Guinean bauxite prices edged up further last week, validated by spot transactions. On the supply side, although Guinean weekly shipments last week posted a notable week-on-week and year-on-year increase, this recovery is unlikely to prove sustainable given the impact of the rainy season and high freight costs.

China's demand for imported ore remains healthy, as alumina operating capacity has not declined amid losses; instead, it has increased with the resumption of some refineries. However, with the Chinese alumina sector's average margins still in negative territory and alumina prices expected to remain weak in the near term, this cost-control pressure from alumina refineries will continue to cap the upside of imported ore prices.

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According to Mysteel research, a major Guinean miner saw decreased volumes for the Aug long-term contract accepted by Chinese alumina refineries, reflecting that current refinery margins cannot absorb ore prices propped up by high oil costs. Additionally, a major Australian miner conducted a tender last week covering four types of ore from Australia and Guinea. With Guinean spot supply relatively tight, market participants' interest in Australian ore has intensified, but their bid prices fell short of expectations due to cost issues.

According to Mysteel's tracking, spot standard-grade Guinean bauxite traded around USD 71 per dmt, while offers for cargoes floating on the water showed further upward momentum-levels that alumina refineries currently find difficult to accept.

Cost support for seaborne bauxite remains strong, which explains why prices have been able to rise even without strong supply-demand backing. According to Mysteel calculations, the full FOB cost at some Guinean mines has exceeded USD 35 per dmt, and freight rates continued to climb-Capesize rates on the Guinea-China route rose to a high of USD 38 per tonne last week, approaching the peak seen in May and Jun.

Caught between firm cost support on one side and weak downstream alumina prices with thin margins on the other, Mysteel expects imported bauxite prices to trade in a narrow range in the near term.

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