China bauxite reference price fell 4.3% over the week to close at US$46.5/dmt

CBIX fell 4.3% (US$2.1/dmt) over the week to close at US$46.5/dmt. Lower ViU-priced cargos from Brazil and Guinea failed to offset lower priced Malaysian material.

In the wake of the extended Malaysian mining ban, sources close to Chinese refineries importing bauxite say they are unperturbed by the extension. This is hardly surprising, with Weiqiao rapidly closing in on supplying its import needs from partnership interests in Guinea, freeing up other exporters to satisfy the remaining refineries. Additionally, Chinese stockpiles remain high, removing any immediate threat of depletion. Malaysian prices remain unchanged on US$26 FOB unwashed and US$38 FOB washed.

News from Guinea is the Weiqiao / Winning Alliance Partners (WAP) second port construction is proceeding on schedule and likely to be operational before the end of calendar 2016, with some reports suggesting as early as next month. WAP still aims to export around 15 million tonnes from Guinea this year, and with the second wharf facility coming on stream end 2016, will have the capacity to export up to 30 million tonnes from 2017 onwards.

North China alumina prices rose sharply over the week, with the north price up 3.1% (RMB60/t) to RMB1,994/t (US$299/t including VAT), due to spot supply tightness in Henan and Shanxi. However, the south remained unmoved on RMB1,880/t (US$282/t including VAT). Spot tightness in Henan and Shanxi is due to most production having been committed to existing sales contracts, combined with rail capacity limitations in Shanxi. The market is expected to strengthen and potentially break RMB2,000/t in the lead up to the National Day Holiday (1st October), as smelters (including recently restarted capacity) look to build stocks ahead of the weeklong holiday.

The Guinea-Shandong capesize rate was up 4.0% (US$0.5/wmt) to US$12.8/wmt over the week, in spite of a 2% fall in bunker (ship fuel) prices. The increase was driven by daily charter rates rising 11.6%. Panamax freight rates North Australia - Shandong were stable at US$4.9/wmt with bunker decreases offset by slightly higher daily charter rates.

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