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The Initial Rally Sign of Domestic Bauxite Price has Emerged, Shanxi Bauxite Bears the Brunt

Following the gradual recovery of alumina market after the Spring Festival period, especially in the second quarter, alumina price rose to 1900 yuan, domestic alumina enterprises showed obvious trend in resuming or increasing production, bauxite demand rose significantly, market initiative was slightly reversed, ore price showed initial sign of rebound, which was particularly evident in Shanxi area with lots of newly added capacity.

According to survey, recently bauxite price in Shanxi area presented evident increase, in which tax-excluded factory delivery price of mainstream bauxite with 60% and A/S 5.5 aluminum content is 240-250 yuan/tonne, 10-20 yuan higher than that in last month.

According to statistics, since the beginning of this year till now 6 million alumina capacity resumed production across the nation, and newly added capacity also reached 3 million tonnes, which is especially concentrated in Shanxi area, including the introduction of Chinalco Huaxing 1 million tonnes capacity, introduction of Jinzhong Hope Phase I 800,000 tonnes capacity, and flexible production of limited capacity from Xingan Chemical and State Power Investment Corporation, total involved capacity within the region reached 3.40 million tonnes, direct demand of bauxite increased by about 8 million tonnes, which resulted in obviously strained bauxite supply in Shanxi area in short term. Currently all alumina factories are actively looking for goods, and local effective mine supply volume was limited, therefore bauxite price presented evident rising trend.

Furthermore, we also learned that, as alumina price in Guizhou area stabilized at 1900 yuan/tonne, local bauxite price also showed rebound intention, currently tax-excluded factory delivery price of aluminum content 60%, A/S6 bauxite in Guizhou area still remains at 170-180 yuan, it is expected later prices will also rebound by 10-20 yuan.