Morgan Stanley: Global Alumina Supply Shortage
Morgan Stanley released a report indicating that China's domestic bauxite supply is hindered due to environmental issues, mining safety controls, and declining ore quality. This has resulted in a cumulative production drop of 20% this year, with an expected annual reduction of 8% to 60 million tons. The bauxite shortage is impacting alumina production, with domestic alumina production rising 3% year-on-year in the first four months. China's bauxite imports increased by 6% in the first four months, with imports from Australia and Guinea rising by 20% and 8%, respectively. Currently, 70% of China's bauxite needs are met through imports, with Guinea and Australia accounting for 74% and 22%, respectively. China has also imported more alumina this year, with imports up 75% year-to-date. The report also states that 5.9 million tons of global alumina supply is disrupted, equivalent to about 10% of the global supply excluding China. Due to China's increased import needs, the global alumina market is further constrained, leading to tighter alumina supplies both in China and globally, and prolonged high alumina prices.
