Industrial Minerals Environmental controls squeeze fused alumina, bauxite supply 4VQQMZVODFSUBJOUZGBDJOHUIFSFGSBDUPSJFTSBXNBUFSJBMTFDUPSJTUPDPOUJOVFJOUIFmSTU quarter of 2021 due to regulations in major Chinese production hubs for bauxite and fused alumina, as well as surging logistics costs, reports Sybil Pan

The 2020-2021 winter shutdown from last file ordering that 14 cities (Zhengzhou, for calcination amid the suspension of November to the end of March is the fourth Kaifeng, Luoyang, Pingdingshan, Anyang, mining activities in Shanxi. consecutive order as part of China’s Hebi, Xinxiang, Jiaozuo, Puyang, Luohe, continued efforts to reduce air pollution in Xuchang, Sanmenxia, Nanyang and Jiyuan) Short-term outlook the northern part of the country. Reduced start a Code Red Emergency Response The outlook for refractories raw materials supply caused by rigid environmental Protocol from January 22. is linked to how much operations are regulations together with increased Elsewhere in Shanxi province, where interrupted by anti-pollution controls in shipment costs have supported upward refractory grade bauxite is produced and China. adjustments in bauxite and fused alumina calcined, calcination has been interrupted Suppliers believe high-grade raw prices from China. by tight supply of raw material amid mining material for the calcination of bauxite Fastmarkets’ fortnightly assessment for regulations and environmental controls. higher than 85% grade will face continued bauxite, refractory-grade, 85%/2.0/3.15- These winter environmental regulations supply tightness in the short term because it 3.2 (0-6mm), fob Xingang was $430-440 have added to the existing supply crisis is not known when the major Xiangwang per tonne on January 21, narrowing upward caused by a shortage of bauxite ore and mine in Xiaoyi city, Shanxi will restart. by $10 per tonne from the previous depletion of high-quality resources there For fused alumina, uncertainty around assessment. On the same day, the price for over the past year. environmental regulations in Henan alumina, fused brown, min 95% Al 2O3, province continue to weigh on the market. refractory sized (0-6mm), fob China was Wider supply-demand gap Although the new round of regulations on $680-700 per tonne, up by $10 on the low The tough anti-pollution measures in January 22 were not as rigid as the ones end per tonne from two weeks earlier on Henan have achieved some positive results issued last winter, a fused alumina producer bullish market sentiment. And alumina, in improving air quality, according to the in Henan said he was wary about unstable fused white, 25kg bags, cif Europe stood at Department of Ecology and Environment air quality for the rest of the regulation €655-730 ($792-883) per tonne, of Henan Province. period until it expires at the end of March. narrowing upward by €15 per tonne from The 2020 average concentration of PM In addition, how long the high logistic the previous assessment on January 7. 2.5 and PM10, measurements of costs – both domestic and overseas – will atmospheric particulate matter, decreased last is another factor clouding the short- Stricter regulations by 13.5% and 11.9% from a year earlier in term outlook. “Even when operations are Market participants saw China’s Henan. Meanwhile, the number of days back to normal and there is demand, the environmental regulations in 2020-2021 as with good air quality reached 245 there, a long-distance freight costs will remain one stricter than in previous years, especially in record high since 2015. major problem in seaborne business,” a Henan province, a major production hub But the improved air quality in Henan second fused alumina producer in Henan for fused alumina. province has come at a cost to fused alumina told Fastmarkets. At the end of 2020, fused alumina capacity. Market sources have reported low Shipping hurdles constitute another producers faced widespread operation inventories of brown fused alumina in factor market sources have cited as affecting shutdowns in major production hubs in the China. Some traders said producers of fused the export of bauxite and fused alumina cities of Zhengzhou, Luoyang and alumina are now focusing on executing from inland production areas to port cities. Sanmenxia, in the province of Henan, earlier orders and have limited availability “Domestic land transport is usually tight lasting as long as two months. These for spot supply. before the Lunar New Year. Now with shutdowns were triggered by several Regarding the supply of refractory grade Covid-19 [re-emerging] in Hebei province, rounds of Code Red (first level) and Code bauxite, while there are rumors of mining it is increasingly difficult to transfer Orange (second level) emergency response activities in Yangquan county, Shanxi processed material out to the port city,” a protocols, and prolonged by land transport province, at the time of writing, suggesting producer in Shanxi told Fastmarkets. halts for commodities when the protocols a daily raw material output of 3,000 tonnes, “In addition, there is the skyrocketing sea were initiated. others in Xiaoyi and Jiexiu areas are talking freight rates. Our orders of 400 tonnes of The anti-pollution controls did ease off in about a shortage of raw material for calcined bauxite to Europe have been Henan at the start of 2021, but a new Code calcination. affected. While the material is ready at Red emergency response protocol was At least two traders of bauxite told plant, we cannot move it to the port for triggered on January 22. On that day, the Fastmarkets that they are now out of the loading because our clients [are generally] provincial government of Henan issued a bauxite market due to a lack of raw material waiting for lower freight costs,” she added.

50 | Metal Market Magazine | February 2021