China's May bauxite imports hit record high; alumina exports soar on Russian demand

China's bauxite imports reached a monthly record high of 11.97 million mt in May, up 31.4% from a year, data from China's General Administration of Customs showed June 24.

Imports now have remained above 10 million mt for five consecutive months, according to the data.

China's bauxite imports are expected to stay elevated in the coming months as supply on the domestic front remains right, and at the same time, demand from domestic refineries has risen, market sources said.

There are some new alumina projects coming online in the second half of this year, using imported ore as the feedstock, a development that will further fuel bauxite demand.

Market share

May bauxite ore imports from Guinea -- China's largest supplier -- increased 32% from a year ago, reaching 6.94 million mt.

Meanwhile, imports from Indonesia rose 41.6% year on year to 1.74 million mt. Australian exports rose 26.6% on the year to 3.09 million mt in May, customs data showed.

Imports from China's three largest suppliers -- Guinea, Australia and Indonesia -- accounted for 98.4% of the country's total imports.

Shandong province remains the biggest importer of bauxite ore, bringing in a total volume of 7.19 million mt in May, which accounted for 60.1% of the country's total imports in the month.

Chinese refineries have increased consumption of domestic ore and sought alternative options to ensure steady supply after Indonesia said it would stop bauxite exports this year.

Alumina output to stay high

China's output of alumina reached a record high of 6.99 million mt in May, up 5.4% from a year earlier, according to latest data from the National Bureau of Statistics.

Alumina is extracted from bauxite ore. China's alumina output has been rising as domestic refineries launched back-to-back new projects and resumed idled capacity.

China's alumina production might stay at elevated levels in the coming months as capacity of new projects will keep increasing, while more capacity will come online in the second half of this year, market sources said.

Russia snaps China's alumina exports

China is a major alumina consumer, but also exports a portion of the commodity, which makes the country generally a net importer.

But China's alumina exports have lately posted a sharp growth as Russia faces material shortage and has been looking for imports.

China's alumina exports rose sharply in May, reaching 188,768 mt, rising 3903.9% from a year ago, according to customs data.

China now has been a net alumina exporter for the second month, only since February 2019, according to the customs data. May exports were the highest since December 2018.

The significant increase in China's alumina exports was attributed to the attractive seaborne prices and strong demand from Russia as the country remains in a conflict with Ukraine.

China's exports are expected to remain elevated, as Australian alumina remains at a premium to Chinese production and Russian demand holds firm, sources said.

About 81.2%, or 153,362 mt, of China's May alumina exports were shipped to Russia, up from 123,687 mt in April, customs data showed.

"The main risk to Russia's supply from China is if high-cost refineries are forced to curtail output due to rising production costs," a trader said. "Refineries could need to keep long-standing relations with existing customers and prioritize them, even if Russia is able to pay slightly more."

The risk of curtailment at some refineries in northern provinces of Shanxi and Henan had increased due to higher refining costs, in the form of bauxite, coal and caustic soda prices, while domestic alumina prices continued a downward trend, sources said.

Australian alumina was at around a $65/mt premium to Chinese production on import-parity terms June 22, based on the Platts assessments at $370/mt FOB Australia and Yuan 2,870/mt EXW Shanxi.

The premium also factors in the current freight rate of $56.10/mt for shipping 30,000 mt of alumina from Western Australia to Lianyungang, China, according to data from S&P Global Commodity Insights.

Imports

China's alumina imports reached 71,454 mt in May, down 50.8% year on year as domestic supply kept rising amid rising production and recovering transportation, customs data showed.

Australia remained the largest supplier for China, with the volume reaching 63,000 mt in May, accounting for 88.2% of the country's total.