Guinea’s “Black Swan Event” Triggers Alumina Prices

Since October, alumina prices have continued to rise, and China’s largest bauxite importer – a large bauxite company in Guinea export shipment is blocked very closely.

Bauxite production cuts, downstream electrolytic aluminum demand is stable, and there is a low inventory background. The Guinea sudden “black swan” event mainly plays a trigger market “fuse” role. Aluminum Corporation of China (8.720, 0.17, 1.99%), Nanshan Aluminum (4.170, 0.05, 1.21%), and Tianshan Aluminum (8.280, 0.13, 1.60%) have said that they are not affected. For the year alumina prices, the industry is generally more optimistic.

Alumina prices showed an accelerated upward trend. As of October 16, the alumina main even plate once rose to 688 U.S. dollars/ton, compared with the beginning of this year, when it rose nearly fifty percent, a record high since the listing.

Guinea Sudden Disturbance Alumina Price Record High

“After 2000, alumina (spot) appeared more than four thousand above the price five times or less, of which in 2005, when it briefly rushed up to 845 U.S. dollars, the current price is the second highest point in history.” An industry chain source recalled.

Guinea GAC company bauxite exports were temporarily suspended by the local customs, mainly due to the recent local river transportation is more congested, the local government intends to charge a river transportation fee, but there is no clear result, even if the eventual charges landed, initially expected that the cost will not be too high.

This round of alumina prices, mainly due to the raw material side of the upstream bauxite supply is tight, alumina spot inventory continues to be low supply and demand gap is obvious under the background of the short-term alumina futures prices and by the Guinea shipping is not smooth, Yunnan dry season is not expected to limit power is strong, the macro sentiment warming up after the news stimulus to accelerate the rise.

On the news, on October 11, the United Arab Emirates Global Aluminum Company (EGA) said its subsidiary Guinea Alumina Company (GAC) bauxite exports have been suspended by Customs, GAC last year, bauxite exports amounted to 14 million tons (Guinea’s 2023 bauxite production of 97 million tons, accounting for 24.3% of the world). On the same day, the main domestic alumina company rose 6.27% during the day.

As of early October, China’s electrolytic alumina plant alumina raw material inventory was 11.8 days, down 21.9% year-on-year. Bauxite stocks at major ports totaled 20.63 million tons, down 9.7% year-on-year, at the low level of inventory in recent years.

Compared with the futures bullish market, the spot side is relatively calm. Some industry chain sources told reporters that the industry alumina directional long single supply accounted for about 80%, the recent spot side of the transaction is less, the buyer and seller wait-and-see mood is heavier, the spot side of the follow-up less than the futures, the term spread expanded to 55-70 U.S. dollars/ton.

It is reported that bauxite accounts for the highest alumina production costs, about 47%, therefore, alumina and bauxite price trend correlation is strong.