For the Quarter Ending June 2023
North America
In the US market, the Bauxite prices showcased a dwindling market sentiment in the second quarter of 2023. During April, the Bauxite prices on a CFR basis showcased an upswing of more than 2.0% due to fluctuation in the cost of imported cargo arriving on the US shores. As per market players, overseas prices remained high in early Q2 due to stronger interest from both traders and refiners. Demand from downstream aluminium producers continued to increase during April and the transactions were consistent on the back of a rise in buying activities. The US manufacturing industry pointed to more favourable operating conditions in April due to an increase in factory orders. Market participants reported a positive demand outlook. The demand was picking up due to active inquiries from the downstream aluminium market. The consumption of aluminium in the end-user automobile sector was high because the automobile sector managed to hold moderate gains with rising sales and output that was lifted by strong demand for electric vehicles. The US Bauxite market showed a declining price trend during mid-Q2 as there was a rise in supply level in the local spot market. The production rate of semifinished Aluminium increased as ALCOA, a major aluminium producer in the USA, signed a deal with local and overseas buyers that ultimately increased the inventory level. The demand from the downstream aluminium industries along with the end user from the Automobile industry showed a bullish market sentiment. During ending Q2, the Jamaican government planned to resume operation in Nain, St. Elizabeth plant in Jamaica for which the Ministry of Mining held a meeting with the JISCO Alpart which would lead to a better supply chain in the global market. The buyers placing large orders as the demand surges amid better economic conditions prevailing in the US spot market after the extension US debt ceiling. The combined effect of rising downstream demand and plunging inventory levels provoked the local mills to increase their price in the US spot market.
South America
In the second quarter of 2023, the Bauxite prices showcased an upswinging price momentum in the second quarter of 2023. During April, Bauxite prices in Brazil experienced an increasing trend due to continuous demand from overseas buyers. Following the news that Indonesia would ban bauxite exports, dependency on Brazilian ore continued to grow. Also, Glencore agreed to acquire a 30% stake in Brazilian alumina refinery Alunorte and a 5% stake in bauxite producer Mineracao Rio do Norte from Norsk Hydro, impacting the prices of Bauxite in Brazil. Moreover, downstream Aluminium manufacturers showed an increased interest in acquiring Bauxite. In May, the extraction of Bauxite was at a slower rate as the mines were doing production cuts to uplift the price in the local spot market. Additionally, the lower energy cost pushed the Bauxite prices in the downward direction. The buyers were placing large orders amid increasing downstream automobile demand that provoked the suppliers to uplift the price as they could easily benefit from the ongoing optimistic market sentiments. The Bauxite prices in ending Q2 experienced an increasing trend as the latest projects signed by the Brazilian government increased the demand for the feedstock Bauxite in the overseas US market. Alcoa, a major aluminium-based industry in the USA has signed a project to establish a grid-based power supply system for the Brazilian Bauxite mines. This provoked the overseas market players to increase the demand for Brazilian Bauxite in the global market.
Europe
In the German market, the Bauxite prices showcased an up-swinging price trend in the second quarter of 2023 due to fluctuation in the cost of imported cargo arriving on the German shores. As per market players, overseas prices remained high this quarter due to stronger interest from both traders and refiners. Market participants reported a positive demand outlook. The demand was picking up due to active inquiries from the downstream aluminium market. The consumption of aluminium in the end-user automobile sector was high because the automobile sector managed to hold moderate gains with rising sales and output that was lifted by strong demand for electric vehicles. The domestic downstream sector such as the Construction and automobile sector increased the demand for Bauxites in mid-Q2 due to the increase in construction activity and rising automobile sales. The improving economic condition along with the relaxation in the increasing interest rate has made the price of Bauxite shift upward. During ending Q2, the downstream automobile sector showed a rise in demand for Bauxite as the sales of automobiles inclined in the German spot market. The energy cost in Germany was high leading to an increase in the extraction cost of Bauxite. The extension of the debt crisis deal led to an optimistic market sentiment among buyers that increased the demand in the US spot market. As per the major market players, the buyers were placing large orders as they were expecting a long-term growth rate from the German Bauxite market.
Asia Pacific
In the Asian market, the Bauxite prices inched in the upward direction in the second quarter of 2023 owing to the firm demand from the downstream Aluminium producers. In early Q2, the prices of Bauxite increased in the Australian market owing to a tight supply. However, demand from downstream Aluminium producers slightly shifted toward the downward side due to higher energy prices and raw material costs, such as caustic soda and bauxite prices. These factors have driven operating costs for Australian alumina producers. On the other side, demand from overseas markets remained consistent, providing an advantage to domestic suppliers to slightly raise their prices to have a good profit margin. In May, the Australian Bauxite price showed an inclining price trend as the supply was on a lower edge due to the ongoing concern for the preservation of natural habitat in Australia. The major conservation councils and groups such as West Australian Forest Alliance, and the Wilderness Society have reported that Bauxite mining has become a key source of deforestation and is a potential threat towards flora and fauna in Australian wildlife. This concern has halted the Bauxite mining in the Australian mills which ultimately lead to a decline in inventory levels and an upsurge in price. During ending Q2, mining activity was at a slower rate due to the arrival of the monsoon and increased allegations against mining activity due to rising concerns of deforestation that is affecting the rich flora and fauna habitat in Australia. Meanwhile, the buyers from the local and overseas market as the Australian feedstock Bauxite market show a long-term growth rate.
MEA
In the second quarter of 2023, the Bauxite prices showcased a stagnancy in their pricing momentum in Guinea. During April, Bauxite prices in Guinea experienced an increasing trend due to continuous demand from overseas buyers. Following the news that Indonesia would ban bauxite exports, dependency on Guinean ore continued to grow. Mining companies were facing growing pressure from the Guinean government to build alumina refineries in the country which increased the demand for more raw Bauxite. At present, domestic leading enterprises such as Chinalco and Weiqiao maintained stable bauxite mining and transportation in Guinea, allowing domestic alumina refineries to increase their purchases of Guinean ore. In May, the Bauxite mines in Guinea had been blooming as the government signs new deals with local as well as overseas industries that uplifted the price of Bauxite in the spot market. Even with the declining price trend for Alumina, the import of Bauxite remained on a higher edge from Guinea. This promoted the increasing price rate of Bauxite in the Guinean spot market. In June, the price of Bauxite showed an increasing trend in Guinea amid a lack of supply across the globe led to a severe decrease in the inventory levels. The Bauxite mining activity was on a lower edge as the leader of the Guinea Junta has forced to cut the production of bauxite by the Guinea Aluminium Corporation to put pressure on Emirati firm GAC for the early establishment of the local refinery. The increased dependency of China on imported Bauxite increased the demand and consequently hiked the price of Bauxite.
For the Quarter Ending March 2023
North America
In the first quarter of 2023, the Bauxite market in North America showed mixed sentiment. Initially, the prices of Bauxite decreased and continued to do so until the end of February owing to sluggish downstream demand and a swift build-up of inventory levels in exchange warehouses. Buyers claimed that first-quarter contract negotiations were postponed, with some still waiting for a resolution and consumers relying on existing stocks. However, Bauxite prices started gaining upward momentum in the last month of the quarter due to dwindling inventories in the US domestic market. Meanwhile, the extraction levels in the USA were relatively low compared to its import requirements. However, import reaching US ports was ultimately affected due to supply chain disruption, which led to a shortage of Bauxite. Meanwhile, demand from downstream aluminum producers picked up during March, and this, coupled with increased buying activities from market players, eventually led to high offtakes.
Asia- Pacific
Bauxite prices in the Asia-Pacific region exhibited a mixed trend during the first quarter of 2023. The bauxite market witnessed a bearish start to the quarter due to the lower trading activity ahead of the Chinese New Year holidays. According to manufacturers, the accumulation of social inventory exceeded expectations and suppressed the high price of Bauxite. Suppliers witnessed a weaker demand from the downstream Aluminium as the electronic market remained slow. However, prices remained stagnant in February owing to a stable supply-demand outlook. Market participants reported that spot trading of imported ore was quiet as downstream alumina markets were at a standstill state. In the final month of the quarter, prices showcased an upswing due to costly imports from overseas markets. Demand from downstream aluminum producers increased during this month, and the transactions eventually improved on the back of a rise in buying activities. Future bookings of the material remained moderate; however, most of the participants expect that demand may increase in the near term.
Europe
Bauxite prices showed fluctuation in the European region during the first quarter of 2023. In January, there was a stagnancy in the pricing trend for Bauxite due to mixed market dynamics and cautious optimism, following a year marked by overbooking and volatile supply, which resulted in a more cautious tone and altered purchasing habits. However, prices declined in February as the European downstream aluminum demand remained muted. The lack of Russian metal and reductions in domestic capacity continues to limit the supply of downstream aluminum in Europe. With the termination of the quarter, Bauxite prices surged as the overseas market offered high quotations to German traders. Market players noted that overseas prices bounced back in the latter half of the month due to stronger interest from traders and refiners, which helped shift market sentiment in favor of sellers. The increase in prices was also attributed to dwindling inventories due to the constrained supply of Bauxite from China, caused by reduced production, and Indonesia's decision to exit from the market.
Bauxite prices in the North American market rose in the fourth quarter of 2022, despite weak economic conditions and lower inventory levels. Participants reported a significant increase in buying interest in October, despite the fact that there is still a plentiful supply of units available on the spot market. According to market participants, the market is slowing down after weeks of negativity and premiums dropping. Buyers are eager to acquire additional tonnages. Participants stated that buying interest in both spot and first-quarter contracts had increased in the latter half of the week. Manufacturers have seen some consumers return to the market, picking up some spot tonnages after a period of inactivity. Participants had differing views about the future, with some noting that premiums had reached a floor and that consumers were beginning to release first-quarter tenders. Others, however, believe that falling freight rates and high overall availability of units kept premiums under pressure. There were still a lot of units available at the end of Q4 and uncertainty about long-term demand.
Bauxite prices in the Chinese market showed a mixed demand outlook in the fourth quarter of 2022, owing to the fluctuating demand outlook amidst COVID prevention and control measures. According to market participants, Bauxite prices fell sharply with the arrival of Q4. Global physical delivery premiums continued to plunge from their highs earlier this year. Chinese output had significantly increased global supply. Chinese citizens began protesting the ongoing "zero-COVID" policies in November. The possibility of a complete ban on Russian metal within the US and the LME had increased uncertainty about the direction of the Bauxite price index; this rally lasted until December. At the same time, the Chinese government was under pressure to relax COVID restrictions due to ongoing protests. Bauxite prices reacted as expected. Spot trading interest in the Chinese domestic alumina market increased at the end of the fourth quarter owing to winter stockpiling activity, pandemic-related transportation restrictions, and air pollution warnings during the winter season. Pandemic-related transportation restrictions had also widened the delivery cost gap between Shanxi and Henan to northwest smelters, resulting in significant price arbitrage between the two origins on a delivered basis.
Europe
Near the end of 2022, Bauxite prices increased in the European market despite low consumer demand and a dismal economic environment. According to market participants, following a strong first half of 2022, demand fell in the face of an increasingly bleak outlook for the manufacturing industry. In Europe, there was widespread concern that manufacturing activity would plummet in October. Most players had not yet felt the effects of massive power cost increases, but they did in November when no one offered fixed power contracts. Even if spot prices fell further in the short term, manufacturers faced significant price increases for their power needs. Weaker consumer demand has caused European Bauxite prices to fall sharply from record highs earlier this year, which peaked due to concerns about material availability in Europe amid high freight rates and port congestion. Many businesses found themselves in a fast-paced environment with no orders, high costs, and declining margins. Consumers were delaying and postponing deliveries across the market, including in Europe, Asia, and the United States. Rising inflation had increased financing and credit costs while decreasing purchasing power.
