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Bauxite Prices in China Leap Up After Military Turmoil Took Hold in Guinea


Bauxite Prices in China Leap Up After Military Turmoil Took Hold in Guinea

IndexBox has just published a new report: ‘China – Bauxite – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

In September, the price for Guinean bauxite in China reached its highest point in 18 months. The military coup in Guinea has caused concerns that shipments from the country will decrease and instigated the spike. Guinea is the world’s primary bauxite supplier, making up more than half of all exports. In case there is a decline in supply from Guinea, China may expand imports from Australia. An increase in bauxite prices could lead to costs for aluminum on China’s domestic market to grow as the country imports nearly 57% of the bauxite it consumes.

Key Trends and Insights

Prices for bauxite in China spiked due to concerns that the recent military coup in Guinea may cause shipments from the country to fall. Guinea is China’s main source of bauxite. In 2020, China imported 53M tonnes of the Guinean product making up 47% of all its bauxite imports.

In September, Guinean bauxite reached $50.50 per tonne on the Asian Metal exchange, its highest point since March 16 last year. Despite no information indicating an interruption in mining activities, the stock market responded to the political situation in Guinea with a spike in prices. Key players operating in Guinea´s bauxite industry, such as Compagnie des Bauxites de Guinee (CBG) and Société Minière de Boke (SMB), did not announce any possible suspension of works.

Guinea is the world’s largest source of bauxite accounting for 50% of global exports. A reduction in supply from Guinea would inevitably result in a deficit in the global market and increase bauxite prices from other countries.

If bauxite shipments from Guinea fall, then China is expected to expand imports from the two other main countries supplying it, Australia and Indonesia. Australia is the top bauxite producer in the world and would most likely grow exports to China. Together, Guinea, Australia and Indonesia supply 97% of all imported bauxite to China.

Bauxite is the main source of alumina or aluminum oxide, which is used to produce aluminum metal. China produces over 60% of the world’s aluminum and is the largest consumer of bauxite. The country’s bauxite imports account for 77% of the global total. An increase in bauxite prices will cause costs for Chinese aluminum products to rise as the country imports nearly 57% of the bauxite it consumes.

Bauxite Production in China

China ranks third in global bauxite production, following Australia and Guinea. China accounts for 16.2% of the world bauxite production.

In 2020, approx. 60M tonnes of bauxite were produced in China; with a decrease of -14.3% compared with the year before. In value terms, bauxite production dropped dramatically to $1.6B in 2020 estimated in export prices.

Bauxite Imports into China

In 2020, the amount of bauxite imported into China expanded sharply to 112M tonnes, picking up by +11% from the previous year’s figure. In value terms, bauxite imports reduced to $5.1B (IndexBox estimates) in 2020.

Guinea (53M tonnes), Australia (37M tonnes) and Indonesia (19M tonnes) were the main suppliers of bauxite imports to China, with a combined 97% share of total imports.

In value terms, the largest bauxite suppliers to China were Guinea ($2.5B), Australia ($1.5B) and Indonesia ($873M), together accounting for 96% of total imports.

Indonesia saw the highest growth rate of the value of imports (+29% y-o-y), among the main suppliers over the period under review, while purchases for the other leaders experienced a decline.

In 2020, the average bauxite import price amounted to $45 per tonne, reducing by -11.3% against the previous year. Average prices varied noticeably amongst the major supplying countries. In 2020, the country with the highest price was Indonesia ($47 per tonne), while the price for Australia ($42 per tonne) was amongst the lowest. In 2020, the most notable rate of growth in terms of prices was attained by Indonesia, while the prices for the other major suppliers experienced a decline.

Source: IndexBox Platform