China Bauxite Market Overview (January-February 2025)

1. Market Overview

From January to February 2025, the tax-exclusive average market price of China's bauxite declined consecutively due to multiple factors. As of the end of February 2025, the average market price of domestic bauxite in China was RMB 604.2/ton, down 1.56% from RMB 613.8/ton at the beginning of the year.

In January, several provincial governments held the Third Session of the 14th People's Congress, during which Shanxi, Henan, Guangxi, and Guizhou issued relevant opinions on the future development of local mineral resources. Additionally, the National Mine Safety Administration released a notice in late January on ensuring safety management for mines that had halted production during the Spring Festival holiday and on resuming operations after the holiday. Overall, regulatory policies for inland mining operations showed signs of further tightening, with operating rates remaining low. Moreover, the Spring Festival holiday led to the suspension of operations at some mines, further tightening domestic ore supply. The subdued market activity also limited the momentum for price increases.

On the demand side, alumina prices fell sharply, significantly narrowing the profit margins of alumina enterprises. The previous continuous increase in bauxite prices had gradually impacted alumina production costs. After the Spring Festival holiday, local mine safety regulators actively assisted mines in resuming operations. However, the approval process for mine reopening takes time, and ongoing safety and environmental inspections, along with the impact of cold wave weather, hindered substantial progress in resuming mining activities. As a result, domestic bauxite supply remained tight.

In mid-to-late February, the Safety Production Committee of the Ministry of Natural Resources held its first plenary meeting of 2025, emphasizing the need for all levels and units within the ministry to deeply study and implement President Xi Jinping’s instructions on production safety. The meeting called for a people-first and life-first approach, a three-year initiative for fundamental safety improvements, and special actions to investigate and eliminate risks and hazards. Overall, national and local governments are expected to further tighten controls over mining safety and environmental regulations, exacerbating the supply shortage.

Regarding prices, alumina prices continued to decline, albeit at a slower pace, further squeezing corporate profits. Some high-cost enterprises in Shanxi and Henan were already experiencing cost inversion. In response, some alumina enterprises chose to lower their bauxite procurement prices, leading to a corresponding decline in the average market price of domestic bauxite.

On the import side, shipments from Guinea remained stable, while Australian shipments declined slightly due to ongoing rainy season conditions. After the holiday, China’s imported bauxite market was still executing orders from the fourth quarter of 2024. Considering shipping times, the impact of previous Guinean spot transactions on alumina production costs gradually emerged, leading to some pre-holiday bauxite orders being renegotiated. In terms of imported bauxite spot offers, alumina prices first declined and then rebounded, with the current market price hovering around RMB 3,350/ton. However, the future price trend remains uncertain. Some high-cost enterprises are already facing losses, resulting in a cautious attitude toward imported bauxite purchases. The weak purchasing sentiment has led to a lack of significant spot transactions in the market.

Overall, bearish factors have weighed on spot price offers, causing continued declines in imported bauxite prices. As of the end of February 2025, shipping costs for transporting Guinean bauxite to northern Chinese ports remained at around $20-21/ton. The mainstream spot price for Guinean bauxite with 45% Al₂O₃ and 3% SiO₂ delivered to China was between $94-98/ton.

2. Market Outlook

Supply: With inland mining resumption efforts underway, domestic bauxite supply is expected to increase slightly. However, as the National People's Congress and the Chinese People's Political Consultative Conference ("Two Sessions") approach, local governments will likely intensify crackdowns on illegal mining activities to prevent violations. As a result, despite expectations for increased domestic bauxite supply, it will likely remain insufficient to meet the demand of alumina enterprises.

Demand: In February, some spot transaction prices have already reached the cost line for certain enterprises in Shanxi and Henan. In March, attention should be paid to the actual production status of high-cost enterprises in these regions, as production cuts remain a possibility. Additionally, the progress of new production capacity in Guangxi and Hebei should be closely monitored. Overall, demand for bauxite remains strong, but price increases will be difficult to sustain.

Imports: Unless unforeseen events occur, overseas bauxite supply is expected to remain stable. Further monitoring is required regarding the progress of new overseas production capacity.

Prices: Some alumina enterprises are already experiencing cost inversion, making them cautious about importing bauxite. Given current market conditions, imported bauxite prices are expected to remain under pressure with a potential downward trend.

Conclusion:
For domestic bauxite, supply is expected to increase slightly, but cost pressures on downstream enterprises remain high. More companies are likely to reduce their bauxite procurement prices, which will negatively impact domestic spot prices. The short-term tax-exclusive daily average price of domestic bauxite is expected to remain in the range of RMB 560-570/ton.

For imported bauxite, alumina enterprises have shown low willingness to accept current spot prices. Given market conditions, imported bauxite prices are expected to continue facing downward pressure.