China's brown fused alumina exports tumble in 2020

By Sybil Pan
Published: Monday, 15 February 2021

China’s exports of refractory-grade bauxite and white fused alumina dropped slightly in 2020, while exports of brown fused alumina plunged by 26%, owing to preference for lower-priced WFA according to sources.

China’s brown fused alumina (BFA) (HS Code: 28181010) exports in 2020 totaled 387,287 tonnes, dropping by 26% from a year earlier at 520,926 tonnes, according to China’s customs data. Major importers of China’s BFA in 2020 included the United States (62,207 tonnes), Japan (58,119 tonnes), South Korea (30,828 tonnes), India (27,713 tonnes) and Taiwan (22,009 tonnes).

Shipments to all major buyers contracted in the past year. BFA shipped to the US declined by 9% from 68,337 tonnes in 2019. The amount shipped to Japan was down by 28% from 80,494 tonnes a year earlier. South Korea shipments dropped by 13% from 35,488 tonnes, India by 22% from 35,664 tonnes, and Taiwan by 2.7% from 22,627 tonnes.

The total shipments of white fused alumina (WFA) (HS Code: 28181090) from China in 2020 stood at 235,448 tonnes, a decrease of 9% from 257,196 tonnes in 2019. Major importers of China’s WFA in the year were Japan (37,997 tonnes), India (29,774 tonnes), South Korea (24,974 tonnes), Taiwan (16,525 tonnes) and the US (15,099 tonnes).

Shipments to Japan and the US plunged by 20% and 46% respectively, while India and South Korea imported more WFA in 2020 compared with 2019, up by 8.2% and 6%.

Given that BFA and WFA are both staple raw materials for the refractories raw materials, in principle, the difference in export volumes should be narrower, according to market sources. The widening spread could be explained by the substitution effect, according to a second trader of refractories in China.

"The price of WFA dropped to a two-year low point in 2020, much lower than the corresponding BFA material. Considering that some downstream applications of BFA can be replaced by WFA, it’s only logical that some buyers of BFA would shift to WFA," he added.

Fastmarkets has reported earlier that BFA and WFA prices are increasingly moving independently, with the latter having deepened its price discount to BFA against a historic premium, resulting in a demand shift from BFA toWFA.

Fastmarkets’ fortnightly assessment of the price for alumina, fused white, 25kg bags, cif Europe stood at €655-730 ($792-883) per tonne on January 21, up by €15 on the low end from the previous assessment, reflecting increasing feedstock prices and high freight costs. The price of alumina, fused brown, min 95% Al2O3, refractory sized (0-6mm), fob China was $680-700 per tonne on the same day, up by $10 on the low end amid tight supply caused by environmental regulations in Henan province.

Exports followed virus impact

Exports of refractory grade bauxite (HS Code: 25083000) from China dropped by 11% year on year in 2020 to 618,768 tonnes from 695,283 tonnes in 2019, according to China’s customs data. The five largest importers of refractory grade bauxite in the year were Japan (120,173 tonnes), India (77,987 tonnes), the Netherlands (66,523 tonnes), Turkey (39,923 tonnes) and Taiwan (37,866 tonnes).

Shipments of refractory grade bauxite to Japan contracted by 19% to 120,173 tonnes in 2020 from 148,186 tonnes in 2019. And 2020 exports to the US were down by 32% to 30,915 tonnes from 45,635 tonnes a year earlier. In contrast, exports to the Netherlands increased by 45% to 66,523 tonnes in 2020 from 45,862 tonnes in 2019.

"As far as our business is concerned, despite some seasonal fluctuation, there’s not too much change in the annual shipments of refractory grade bauxite," a trader of refractory grade bauxite in China said.

"China could be viewed as a major producer of refractory grade bauxite. There is the ex-China source of Guyana, but the two materials are of different specifications, which is not likely to cause demand shift when one is cheaper while the other is priced higher. Hence, there would not be too much demand fluctuation in terms of refractory grade bauxite." she added.

Against the backdrop of reduced operations, logistical disruptions in China and lower overseas consumption in markets brought about by the Covid-19 pandemic, exports of refractory grade bauxite fluctuated significantly throughout the year.

Exports in April surged to 86,350 tonnes in 2020, up from 64,486 tonnes in April 2019. Then shipments declined to the lowest level of the year at 35,622 tonnes in July during the slow summer season. While shipments slowly recovered in September and October on an annual basis, they fell again in the months of November and December compared with the same months in 2019, following large purchases by major buyers previously and China’s tight supply of the material.

In line with the shipment fluctuations, prices of refractory grade bauxite stayed mostly firm from January to May 2020, and bottomed out in July. Prices then started to appreciate progressively from September until the end of the year, supported by material supply shortage.

Supply tightness and increased freight costs supported Fastmarkets’ fortnightly assessment for bauxite, refractory-grade, 85%/2.0/3.15-3.2 (0-6mm), fob Xingang at $430-440 per tonne on Thursday January 21, up by $10 on the low end from the previous assessment, gaining 12% on the midpoint from a year earlier.