Bauxite Prices Trend and Forecast

North America

Bauxite prices in the North American market rose in the fourth quarter of 2022, despite weak economic conditions and lower inventory levels. Participants reported a significant increase in buying interest in October, despite the fact that there is still a plentiful supply of units available on the spot market. According to market participants, the market is slowing down after weeks of negativity and premiums dropping. Buyers are eager to acquire additional tonnages. Participants stated that buying interest in both spot and first-quarter contracts had increased in the latter half of the week. Manufacturers have seen some consumers return to the market, picking up some spot tonnages after a period of inactivity. Participants had differing views about the future, with some noting that premiums had reached a floor and that consumers were beginning to release first-quarter tenders. Others, however, believe that falling freight rates and high overall availability of units kept premiums under pressure. There were still a lot of units available at the end of Q4 and uncertainty about long-term demand.

Asia Pacific

Bauxite prices in the Chinese market showed a mixed demand outlook in the fourth quarter of 2022, owing to the fluctuating demand outlook amidst COVID prevention and control measures. According to market participants, Bauxite prices fell sharply with the arrival of Q4. Global physical delivery premiums continued to plunge from their highs earlier this year. Chinese output had significantly increased global supply. Chinese citizens began protesting the ongoing "zero-COVID" policies in November. The possibility of a complete ban on Russian metal within the US and the LME had increased uncertainty about the direction of the Bauxite price index; this rally lasted until December. At the same time, the Chinese government was under pressure to relax COVID restrictions due to ongoing protests. Bauxite prices reacted as expected. Spot trading interest in the Chinese domestic alumina market increased at the end of the fourth quarter owing to winter stockpiling activity, pandemic-related transportation restrictions, and air pollution warnings during the winter season. Pandemic-related transportation restrictions had also widened the delivery cost gap between Shanxi and Henan to northwest smelters, resulting in significant price arbitrage between the two origins on a delivered basis.

Europe

Near the end of 2022, Bauxite prices increased in the European market despite low consumer demand and a dismal economic environment. According to market participants, following a strong first half of 2022, demand fell in the face of an increasingly bleak outlook for the manufacturing industry. In Europe, there was widespread concern that manufacturing activity would plummet in October. Most players had not yet felt the effects of massive power cost increases, but they did in November when no one offered fixed power contracts. Even if spot prices fell further in the short term, manufacturers faced significant price increases for their power needs. Weaker consumer demand has caused European Bauxite prices to fall sharply from record highs earlier this year, which peaked due to concerns about material availability in Europe amid high freight rates and port congestion. Many businesses found themselves in a fast-paced environment with no orders, high costs, and declining margins. Consumers were delaying and postponing deliveries across the market, including in Europe, Asia, and the United States. Rising inflation had increased financing and credit costs while decreasing purchasing power.

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