Global seaborne bauxite trade, which totalled 81mt in 2016, is projected to have grown firmly in 2017, by 20% to 98mt, reflecting continued growth in Chinese aluminium production and increasing availability of the ore after a number of years of export disruption. While China accounts for the majority of import demand, the supply side has been much more varied in recent years and deserves closer inspection…

Chinese Imports Speeding Up

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Global seaborne trade in bauxite, the primary ore used in the production of aluminium, is dominated by China’s imports. The country imported 52mt of bauxite in 2016, two-thirds of global imports, reflecting China’s importance to global aluminium production. China’s aluminium production has grown by an average of 10% p.a. over the last five years as a result of firm manufacturing and construction demand, and has grown 5%y-o-y to total 27mt in the first ten months of 2017, accounting for more than half of global aluminium production.

Supply Side Speedbumps

While Chinese demand has continued to grow, global bauxite supply has seen significant disruption in recent years, after Indonesia introduced a ban on bauxite exports in January 2013 to try to support domestic refining industries. China’s bauxite imports fell by almost 50% to 37mt in 2014, and stockpiles were drawn down significantly. In the wake of the ban, Malaysia’s exports of bauxite increased rapidly, but large amounts of illegal mining and incidents of environmental damage and pollution eventually prompted Malaysia to ban open-pit bauxite mining in January 2016. Australia provided some additional supply, but this was not sufficient to prevent a 7% fall in China’s bauxite imports to 52mt in 2016.

Guinea Picking Up Speed

However, China’s imports have grown firmly in 2017 so far, as Guinea has been the latest country to ramp up its bauxite exports. China has sought to diversify its bauxite supply, and has invested heavily in infrastructure and mining projects in the West African country in recent years, with exports to China expected to rise from 0.3mt in 2015 to more than 25mt in full year 2017, with Guinea having become China’s largest supplier of the ore.

Such has been Guinea’s growing importance to dry bulk trade that Port Kamsar has given its name to the ‘Kamsarmax’ design of c.80-85,000 dwt, the largest bulkcarrier which can be handled at Guinea’s main bauxite port. However, rising exports from Guinea are also providing opportunities for Capesizes, via barge-to-ship transhipment.

Driving Dry Bulk Trade

So, bauxite trade has grown firmly this year, with the aluminium ore expected to account for 38% of the growth in minor bulk trade in 2017. Furthermore, the long distance of the Guinea-China route has had further benefits, with a 32% y-o-y increase in China’s bauxite imports in the year to October representing an estimated 64% rise in tonne-mile terms. Overall, with bauxite trade projected to account for around 13% of the total tonne-mile growth in dry bulk trade in 2017, despite representing just 2% of total dry bulk trade, it is clear that bauxite has gone the extra mile for dry bulk trade this year.

Source: Hellenic Shipping News.