Chinese mining disruption supports refractory-grade bauxite uptick; fused alumina flat

By Davide Ghilotti, Sybil Pan
Published: Monday, 24 February 2020

The price of refractory-grade bauxite rose in the two weeks to Thursday February 20 due to a low production recovery rate and limited logistics in the main Chinese production hub of Shanxi province, while fused alumina remained unchanged on production and delivery uncertainty in Henan.

Fastmarkets assessed the price of bauxite, refractory-grade, 85%/2.0/3.15-3.2 (0-6mm), fob Xingang at $390-405 per tonne on Thursday, up 2% on the midpoint from a fortnight ago.

Over the same assessment period, the price of bauxite, refractory-grade, 86%/2.0/3.15-3.2 (0-6mm), fob Xingang rose to $405-430 per tonne, from $400-420 per tonne.

Meanwhile, the price of bauxite, refractory-grade, 87%/2.0/3.15-3.2 (0-6mm), fob Xingang increased to $430-445 per tonne against the previous assessment at $420-440 per tonne. 

And the bauxite, refractory-grade, 88%/2.0/3.15-3.2 (0-6mm), fob Xingang price was at $450-460 per tonne, up from $440-450 per tonne.

The coronavirus (2019-nCoV) outbreak, which is entering its third month, continues to disrupt bauxite mining, calcination and transport.

The provincial government of Shanxi reported a restart rate of 61.4% among large and medium sized companies on February 18.

But according to market sources, the bauxite calcination operation recovery rate was only around 10% in the province and mining activities were not allowed at the moment. This indicates there will be limited new output of bauxite before operations return to normal, which was expected to be in March.

Many producers of calcined bauxite in contact with Fastmarkets said operations were suspended in most parts of Shanxi, especially in Jiexiu and Xiaoyi, with calcination factories waiting for the government’s reply to applications to restart.

"We filed the application [for business restart] six days ago, but have not got any reply yet," a producer in Yangquan said. "If we get the permit for a production restart, we can, at least, ship the inventory out [because only with the permit can factories get the pass for logistics]."

Another producer based in Shanxi told Fastmarkets they were due to restart the moving of material from this week.

"We’re moving material to Tianjin for processing and packing. This will be shipped in March," the producer said. "We are fulfilling all existing orders, but are not in a position to take new ones [at present]."

In addition to the slow rate of operation are logistics hurdles. 

Shanxi is an inland province. This means any material bound for export is transported to the port city in advance, which leads to the issue of limited drivers for cross-provincial transport and possible quarantine periods when arriving at port.

"The major concern over cross-border transport is that it’s very hard to find drivers. We heard that at the Tianjin port, drivers from other provinces would face a two-week quarantine. Meanwhile, there are other risks along the way," a trader of bauxite in Shanxi told Fastmarkets, "It might get better in March but it all depends."

Furthermore, raw material sourcing constitutes another factor that continues to threaten the supply of calcined bauxite from China.

High-grade bauxite ore is difficult to source due to depletion of resources as well as governments’ efforts to keep mining activities regulated.

The restricted mining activities due to the virus outbreak have caused some calcination factories to express concerns over the difficulty in sourcing raw materials and the shortage of certain grades of calcined bauxite, such as 85% bauxite.

"The majority of bauxite in Yangquan is bought from other places in Shanxi because mines here are either under regulation or running out of qualified resources," a third producer source said.

Fused alumina markets flat

Fused alumina production in Henan are starting to show signs of recovery in major production cities of Zhengzhou and Luoyang. But operations are only at a minimum level and producers are warning about the delay in shipments.

Prices of fused alumina remained unchanged due to this uncertainty over production and delivery.

Fastmarkets assessed the price of alumina, fused brown, min 95% Al2O3, refractory sized (0-6mm), fob China at $720-730 per tonne on February 20, in line with the previous assessment.

The price of alumina, fused brown, min 95% Al2O3, FEPA F8-220 grit, fob China was at $800-820 per tonne on the same day.

And the price of alumina, fused white, 25kg bags, cif Europe stood at €670-770 ($726-835) per tonne, stable for third consecutive fortnight.

"Taking BFA [brown fused alumina] as an example, calcined bauxite [the feedstock for BFA production] in Shanxi cannot be delivered at the moment and we don’t know what the price will be. It’s impossible to quote now," a BFA producer in Luoyang said. "And we are not in full operation, just dozens of workers taking shifts on a daily basis. The output is only for existing orders."

Meanwhile, Henan is also located far from the port so there come the issue of logistics.

"Orders are mainly those signed before the [Chinese New Year] holiday. And even for those orders, it’s uncertain when we can arrange the shipments because it’s very difficult to find trucks and drivers who would like to take the risk," a second fused alumina producer in Zhengzhou city said.

"If there are new inquiries, we will tell them that offers can only be made by the middle of March with freight until the end of the month," a third fused alumina producer in Zhengzhou city told Fastmarkets.

More like this