COLUMN-Chinese stockpiles mean bauxite may not be a sure bet – by Clyde Russell (Reuters India – October 29, 2014)

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LAUNCESTON, Australia, Oct 29 (Reuters) – Bauxite is one of the few natural resources to attract positive commentary amid the sharp falls in many commodities in the past few months.

Certainly the outlook appears quite constructive for the mineral used to make alumina, which in turn is the primary ingredient for aluminium.

Indonesia produced about 12 percent of the world’s output and was the top supplier to China prior to Jakarta imposing a ban on exporting raw mineral ores in January.

The Ebola outbreak in West Africa appears to have had a limited impact on shipments from Guinea, so far, but the risk of disruption rises as long as the deadly disease remains prevalent in the region.

Also, much of the planned new supply is in West Africa, including major projects in Mali, and the longer the Ebola crisis endures, the more likely delays and cost overruns become.

Throw in signs that, excluding China, aluminium demand is rising as the U.S. and other economies recover, while Chinese aluminium output remains robust, and it’s not hard to see bauxite as a shining light in the commodity firmament.

The problem is that all of this positive news has yet to show up in the bauxite market, and much of the blame for this can be laid at China’s door.

Chinese bauxite buyers took a very practical view of Indonesia’s proposed ban on mineral exports and spent much of 2013 stockpiling prior to the imposition of the export ban.

China imported 70.7 million tonnes of bauxite in 2013, a gain of 79 percent on 2012 and well ahead of likely use of about 40 million tonnes.

This means that China started the year with at least 30 million tonnes, and possibly more, of bauxite in storage.

In the first nine months of 2014, China imported 27.9 million tonnes of bauxite, down 47 percent on the same period in 2013.

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