Disruptions in China caused by measures taken to contain the Coronavirus outbreak have begun to affect the bauxite and fused alumina markets, with consumers in Europe and other regions reporting short-term shortages. Measures include the closure of mines (during an extension to the New Year holiday) and disruptions to shipping (with February shipments now delayed until March), in an attempt to limit travel for Chinese citizens.
Since mines closed for the New Year, there have been two extensions and operations in Shanxi and Henan provinces remained closed into early February. Mines are expected to open again towards the middle of the month, but some consumers are preparing for further extensions. Once back on-line, it could take several weeks for mines to return to full production levels. Roskill’s comment on the general implications of Coronavirus on commodity markets can be found here.
Another factor to account for is the two-week self-imposed quarantine period recommended for workers returning to provinces such as Henan once travel starts back up. Even if mines are allowed to re-open, staff may not be available initially for mines to return to production.
IM Fastmarkets reported the story and suggests that prices for refractory-grade brown-fused alumina and white fused alumina have so far remained steady but could increase if supply disruptions continue. Meanwhile, bauxite prices have increased slightly, rising by US$5/t in early February.
Temporary shortages are expected to have little impact on price with suppliers about to return imminently to production. Weak demand in the main consuming sector of refractories and slowdowns in winter production will lessen the impact of any shortages.
Some refractory producers, however, are carrying little in the way of raw material stocks right now, having run them down as part of cost-cutting measures in the face of lower demand and steel industry weakness. Such consumers could struggle with supply in the coming month or so.
Roskill forecasts refractory output to grow by less than 1%py over the next decade to 2029, with Chinese production to move into decline. Roskill’s current analysis of global and Chinese steel markets can be read here.
Roskill’s NEW report Non-metallurgical Bauxite & Alumina: Outlook to 2029, 10th Edition was released in December 2019 and includes analysis of recent industry trends on supply, demand, trade and prices, as well as providing forecasts to 2029 and profiles of the main producers.
Roskill will be speaking at the 2020 Fastmarkets Bauxite & Alumina Conference, to be held in Miami, Florida in March.