----Interview with Dan Liu
Deputy General Manager
Xiamen Xiangsen Aluminum Co.
Xiamen Xiangsen Aluminum Co., establised in 2018 with the registration capital at RMB300million, focuses on bauxite trading, processing and mine procurement. XMXYG Co. Ltd. is the biggest shareholder, followed by Senze Group and Hangzhou Jinjiang Group.
Asian Metal: Welcome to the interview, Mr. Liu, please introduce your company's business briefly first.
Mr. Liu: We focus on Australian bauxite import and sell to alumina producers in Shanxi with a sales volume of around 1.5 million tonnes in 2022. In Q1 of 2023, due to the rainy season in Australia，we restarted the first vessel shipment from late March, targeting at a similar volume of 1.5 million tonnes in 2023.
Asian Metal: From Q4 last year, alumina producers in Shanxi cut production for losses. Did it influence the demand for imported bauxite? What is the current situation?
Mr. Liu: Yes, many major alumina producers in Shanxi cut production due to losses, leading to reduced demand for imported bauxite. So far as I know, the alumina production cut reached over 7 million tonnes per year with 50% relying on imported bauxite by the end of Q1 of 2023. Entering Q2, those alumina refineries restarted normal operation gradually as the caustic soda prices already dropped to below RMB3,000/t (USD436/t) delivered. The overall cost slipped.
Asian Metal: Will the demand for imported bauxite improve in 2023?
Mr. Liu: I think the demand will definitely improve this year as the increased alumina production capacity would reach 3 million tonnes at least. For example, the new alumina production capacity expansion projects from a major producer in Hebei and two major producers in Guangxi will be designed on basis on imported bauxite.
Asian Metal: Facing the improving demand, will there be more chances and advantages for Australian monohydrate bauxite import this year?
Mr. Liu: Firstly, the prices are cheaper. In Q1, the prices for Australian bauxite Al2O3 52%min SiO2 10%max stood at USD44-45/dt CIF China, compared with USD65-68/dt CIF China for Guinean bauxite Al2O3 45%min SiO2 3%max; Secondly, Australian monohydrate bauxite could be mixed with Chinese bauxite with high sulfur content due to its tiny sulfur content, while other bauxite products do not have such advantage; In addition, caustic soda prices reduced in Q1, benefiting high silicon Australian monohydrate bauxite; Finally, Australian bauxite enjoys stable quality, stable political environment and steady freight.
Asian Metal: Guinean bauxite prices reduced since late last year discouraged by increased supply over the past year. How about the Australian bauxite prices? What is your outlook for prices and freights in the second half of 2023?
Mr. Liu: In Q1, our Australian bauxite prices fixed at USD44-45/dt CIF China, compared with the average price of USD40/dt CIF China last year. I think alumina prices would go down in April and May, so bauxite prices might slip. Despite the increased average price of Australian bauxite, the prices remain the most competitive compared with other bauxite products. In Q1, the freight for cape-size vessels from Australia to China touched about USD14/t, lower than the average level of USD20/t last year. I think the average price for this year will slip.
Asian Metal: From March this year, Indonesia has banned bauxite export. Will that benefit Australian bauxite export?
Mr. Liu: Yes, it brings benefits to some extent. In 2022, Indonesia exported close to 20 million tonnes of bauxite to China. The ban will force Chinese alumina refineries to increase the bauxite import volumes from other countries like Guinea and Australia. During the first four months of this year, China imported around 44 million tonnes of bauxite from Guinea and Australia in total, up by 27.5% YoY. I think the overall increased volume would reach over 20 million tonnes in 2023.
Asian Metal: How do you view Chinese bauxite supply this year? Will alumina refineries return to Chinese bauxite?
Mr. Liu: This year, the bauxite mining restriction in Shanxi eased, but it will take time for new mines to launch commcerial operation, so alumina refineries could not shift to Chinese bauxite soon. However, the Chinese bauxite supply will increase obviously in 2024.
Asian Metal: What is your outlook for domestic demand for imported bauxite in the coming three years?
Mr. Liu: For the loosening bauxite mining restriction, China's demand for imported bauxite might reduce in the future but the situation would not change this year. The demand for imported bauxite might slip from next year. In the long run, the demand for imported bauxite in Shanxi will reduce is the government removed the restriction completely. Currently, our regular buyers’ demand for imported bauxite accounts for 15-30%, which would slip in the long term.
Asian Metal: Thank you and wish your business improve to a higher level in 2023!
