Bauxite & alumina: Chinese fused alumina producers under pressure

Smog alerts are set to be orange or even red this winter according to the Xinhua News quoting officials at the Henan Province Environmental Bureau. Frequently, Chinese cities with high levels of industrial activity see high levels of air pollution in the winter months when thermal-heating is switched on. The high smog alerts mean that industrial units are highly likely to be closed in the affected areas which include the major production centres for fused alumina.

The industry has already been under pressure from stricter environmental enforcements over the last two years and, in areas such as Xingyang, some operations have been closed for months. In others, operations have been closed for upgrading to comply with new measures. The limited production of BFA and WFA is creating an uncertain supply situation.

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Brown fused alumina producers are also struggling for feedstock of abrasive grade bauxite as well as rising energy costs and power shortages. Production from a few large rotary kiln producers in Shanxi that have installed comprehensive environmental monitoring systems is continuing. However, production costs are higher because of rising prices for bauxite, power and environmental controls, and industry sources have indicated that up to 60% of capacity may be idled or just producing on an intermittent basis.

Raw bauxite supply for calcining is extremely tight because mines have been progressively closed and cut back for environmental and cost reasons. It is expected that this situation might get worse. Additionally, Chalco, the major bauxite producer for integrated aluminium production, has in the recent past not supplied sufficient quantities of selectively-mined ore which is needed for calcination.

To cap this, demand from the refractories sector in China, one of the major markets, has been weaker in 2019 following a stronger year in 2018. Prices for BFA for refractories are much closer to WFA because of the feedstock issues, but both are weak or flat going into the fourth quarter according to Fastmarkets latest pricing data.

Roskill’s NEW report Non-metallurgical Bauxite & Alumina: Outlook to 2029, 10th edition is due for publication in the coming weeks. Click here to download the brochure and sample pages, or to access further information.

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This article was written by Alison Saxby. Please get in touch below if you wish to discuss further:

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