Chinese-origin fused alumina and bauxite spot prices gained as raw material and transportation costs rise. While many buyers are reluctant to accept the increase, some producers warned that the uptrend could continue amid supply tightness.
Chinese suppliers have raised offers for refractory-grade bauxite and fused alumina in the spot market as raw material and transportation costs jumped following Beijing’s move to cut truckload volume.
The Chinese ministry of transportation cut the maximum truckload volume for four-axle trucks to 31 tonnes, down from 40 tonnes previously, with effect from 21 September.
Furthermore, some market participants are also seeing a shortage of trucks, which further tightened transportation between production facilities to mine.
«Trucks are in tight supply, many drivers are reluctant to accept deliveries,» said a Henan-based fused alumina producer.
In addition, bauxite mine output in China has been capped due to the Chinese government’s restriction on new mining permit, a refractory-grade producer told IM.
Suppliers have raised their offers for all Shanxi-origin bauxite grades by $10/tonne week-on-week, according to IM assessment on 13 October.
Spot prices for Shanxi-origin, rotary kiln 85%/1.8/3.15 bauxite were assessed at $250-280/tonne on a FOB Xingang basis, while the 86%/1.8/3.15 material was at $280-290/tonne FOB, up $10/tonne week-on-week.
Meanwhile, 87%/2.0/3.2 bauxite, calcined kiln FOB Xingang was assessed at $300-325/tonne, while 88%/1.8/3.25 material at $330-360/tonne, also an increase of $10 compared to the previous week.
Fused alumina
Under the environment regulation, producers are legally required to switch to natural gas for production in China.

However, some plants are not connected to the gas grid and as a result, calcined bauxite production fell. As calcined bauxite is a raw material used for brown fused alumina production, the supply tightness has in turn capped BFA output.
Spot prices for 95.5% Al 2O3 min brown fused alumina (refractory sized 0-1,1-3,3-5mm) increased to $585-600/tonnes, up from $570-590/tonne in the previous week.
Sharp spikes in Chinese domestic alumina prices after October’s Golden Week holiday is also pushing white fused alumina (WFA) prices higher.
Chinese domestic alumina prices was assessed at a range of 2,200-2,500 yuan ($327-372) per tonne on a delivered in China basis on Thursday October 13, up from 2,050-2,100 yuan a week earlier, according to IM’s sister publication Metal Bulletin.
Consequently, refractory-grade WFA spot prices have been lifted by the rising raw material alumina cost.
Spot prices for 99% Al2O3 min WFA in 25kg bag rose to €625-650/tonne on a CIF Europe basis, up from €625-650/tonne previously, according to IM’s assessment on 13 October.
Producers warned that there could be further price increases in the coming weeks amid volatility in raw material cost.
«My offers to customers for the past two days will only have a five-day validity, as prices will increase again in two days’ time,» a Henan-based fused alumina producer told IM.
While another Shanxi-based bauxite and BFA supplier agreed that supply is tight they added that it is not severe enough to cause upward volatility in prices.
Some buyers are holding out for lower prices but sellers warned that supplies are running out during the wait, a bauxite producer and one trader said.
Furthermore, unlike in the past, many producers are not willing to sell at a loss, and some are even selective about their customers, a Tianjin-based trader said.
«The buyers are deceiving themselves, the market prices are still rising,» he added.
While many buyers are reluctant to accept the sudden increase in prices, they may slowly accept the higher rate by November, traders and producers said.
«I expect the impact would be more obvious in two-three months, we will see then if they [the buyers] would believe it or not,» one bauxite producer said.

Technical ceramics (TGs) are an extended family of materials with several overlapping and undefined borders with other categories of engineered products.

Simply defined, TCs, also called advanced, engineered, special and fine ceramics, are materials whose thermal, electric and mechanical properties allow processes or products to run faster, at higher temperatures, in more extreme environment and last longer than other materials…

When it comes to steel, China is faking it.

Faced with global condemnation for flooding world markets with cheap steel, China announced last year it had implemented ambitious cuts in steel capacity.

But a new report by Greenpeace East Asia and Chinese consultancy Custeel says that number was largely smoke and mirrors. Many of the plants China says it closed down were already idle, while production was restarted elsewhere and brand new plants opened.

In fact, China’s steel industry actually saw a net increase in operating capacity equivalent to twice Britain’s total capacity, the report concludes.

That’s bad news for the air in Beijing, but it could also inflame China’s trade relations with the United States and the European Union, which have repeatedly accused China of dumping cheap steel abroad and damaging their own steel industries.

Tens of thousands of European steelworkers demonstrated last year in Brussels and in Germany against cheap Chinese steel.

“Impressive as they seem, China’s current steel capacity reduction targets won’t suffice to limit oversupply, as local governments maneuver to shield zombie steel mills and minimize the impact of the policies,” said Lauri Myllyvirta, Greenpeace global coal campaigner.

“Global markets are awash with steel and the people of northern China continue to choke on the industry’s major byproduct, smog. Increasing steel capacity makes neither economic nor environmental sense.”

China, which accounts for half the world’s steel production, has a total capacity of 1.1 billion metric tons (1.2 billion U.S. tons): It has announced plans to eliminate 100-150 million metric tons (110-165 million U.S. tons) of annual production over the next five years, but cutting capacity has so far done little to rein in output and exports.

Last year, it said it had far exceeded its initial target to cut capacity by 45 million metric tons (50 million U.S. tons), recording cuts of around 85 million metric tons (94 million U.S. tons).

But the report says that 73 percent of the announced cuts in capacity were already idle — in other words the plants were not operating. Only 23 million metric tons (25 million U.S. tons) of cut capacity involved shutting down production plants that were operating.

At the same time, some 54 million metric tons (59.5 million U.S. tons) of capacity were restarted, and 12 million metric tons (13 million U.S. tons) of new operating capacity came online.

White fused alumina spot prices rose amid higher raw material cost, but increases in China are steeper compared with elsewhere as continuing environmental pressure restricted output amid stronger domestic demand.

Spiralling raw material cost is lifting white fused alumina (WFA) spot prices as Chinese producers raised their offers, market sources told IM.

Alumina is the key raw material used to produce WFA, and recent restocking from Chinese aluminium smelters have pushed prices up by about 40% since October.

Chinese domestic alumina prices was assessed at a range of 2,700-2,850 yuan ($390-412)/tonne on a delivered in China basis, up from 2,650-2,800 yuan a week earlier, according to IM’s sister publication Metal Bulletin on Thursday November 24.

Driven by the uptrend in China, alumina prices elsewhere in the world is also rising. Inferred alumina index on a FOB Brazil basis, the reference for European smelters, was calculated at $318.47/dry metric ton, up $17.02/ton compared to a fortnight ago, according to Metal Bulletin this week.

As smelters’ alumina purchased volume are often much bigger compared with WFA producers, with the average standard cargo size at 30,000-35,000 tonnes, the former could secure lower volume-related prices.

One WFA producer in China has quoted alumina prices as high as 3,000 yuan ($433.50)/tonne, and he had to raise his WFA offers to reflect higher raw material and production cost.

Spot refractory-grade WFA (99.0% Al2O3 min, in 25kg bags) prices were assessed at €650-680/tonne on a CIF Europe basis, up €27.50/tonne compared with the previous week, according to IM’s assessment on 24 November.

Materials for spot delivery in Germany traded in the region of €680/tonne on a DAP basis, one Europe-based producer told IM.

Stronger demand, reduced supply in China

Due to the Chinese government’s anti-pollution crackdown on many production facilities in China since July, many fused-alumina plants that did not meet environmental standards were shut down. The shut down were particularly severe in Henan province, one of the main regions for fused-alumina production.
As a result, reduced WFA supply amid firm domestic demand is supporting prices in China, producers in the country said.

Chinese-origin WFA were trading in the region of 5,000 yuan (€682.45)/tonne on an ex-work basis within China, according to two suppliers.

Many expect strict anti-pollution checks to remain in China for the long-term, and consequently, the restricted production is expected to support WFA prices in the country.

In contrast, WFA supply in Europe were not disrupted and the region remained well-supplied amid weak refractory demand. Consequently, European product prices did not receive the strong boost like its Chinese counterpart.

China is one of the biggest fused alumina producer in the world.

Monthly production of chromite with 44-48% Cr2O3 content was down both on a sequential and year-on-year basis, as reduced mining capacity is denting overall sales volumes.

South African output of high-purity chromite fell in October after a surge in the previous month, while the latest output remained some 15,000 tonnes below the same time in 2015, government data provided to IM shows.

Total production of chromite with 44-48% Cr2O3 content stood at 181,847 tonnes in October, marking a 7% decrease year-on-year (y-o-y). This follows capacity shutdowns that took place in the country during the 2015/16 phase of weak markets.

The October output fell also on a sequential basis after production peaked in September to close to 188,000 tonnes, a record-high for 2016 to date.

Total sales, including domestic and exports, stood at 122,418 tonnes for the month. This was 12% down on September and almost one-quarter (24%) below October 2015 sales.

Sources active in the chrome industry in South Africa told IM this week that «supply will remain below 2015 levels for the foreseeable future», citing the closure of a number of mines and processing operations, such as Dilokong Chrome and MTI.

«Availability is particularly tight for the underground-mined ores, as underground mines were the first to close when prices were low due to high operational costs,» one local producer told IM.

Shipping operations at the country’s main ports – Richards’ Bay and Durban – were affected by low availability of vessels in the late months of 2016, prompting delays as sellers were unable to secure cargo space on ships.
Exports accounted for over 60% of total volume sales in October.

Domestic sales generated a turnover of South African rand (Zar) 83.6m ($6.3m), while exports were worth Zar 191.1m. At the same time, both the local and export markets have remained a notch below the levels of trade seen in late 2015, further showing that the overall mining capacity in South Africa has shrunk in size.

Prices
The export market for chromite meanwhile remained quiet and stable over the past fortnight against the levels it reached at the end of December.

Suppliers ascribed the lack of business to the impending Chinese New Year holiday period, which starts 27 January.

In the words of a European supplier, «China was instrumental in driving prices upwards last year, both for met and non met chrome».

«We’ll have to see what strategies they put forward after the holidays,» he added.

IM is currently tracking prices of chemical chromite, 46% Cr2O3, wet bulk at a range of $430-440/tonne FOB South Africa, unchanged compared with previous weeks.

Foundry grade chromite, 46% Cr2O3, wet bulk, is meanwhile priced at a range of $410-450/tonne FOB South Africa.

The surge in export prices in the second half of last year prompted miner Afarak Trading to look to reopen its opencast mine in Mecklenburg, the company confirmed to IM this month.

The company is also looking to develop an underground operation at the site, with a view to fill part of the gap in supply of underground-extracted LG chrome ore. Works are expected to start soon.

South Africa is world’s largest supplier of chrome ore, which is used in a number of metallurgical and non metallurgical applications alike. While low-grade UG2 chrome ore (usually with a 40-42% Cr2O3content) is one of the main met grades, non met industries including chemicals, foundry and refractories employ higher-purity chromite, with a chrome content above 44%.

Some LG chrome of 44% Cr2O3 and above is also used in met applications.

Besides South Africa, other producers of the mineral include India, Kazakhstan, Turkey and Pakistan.