Chinese seaborne bauxite imports have risen strongly in recent years. Between 2007 and 2011, imports rose from 24mt to 45mt, driven by the rapid expansion in alumina capacity, as well as the limited supply and typically low quality of China’s bauxite reserves. China has a high dependence on imported bauxite (estimated at 55% in 2011), and consequently disruptions to Indonesian bauxite supply in 2012 have contributed to several recent changes in Chinese imports.

Dominated by Indonesia

As shown on the Graph of the Month, Chinese bauxite imports have grown rapidly, driven by the doubling of domestic aluminium output since 2007. By 2012, China accounted for 44% of global aluminium output, and 53% of bauxite imports, up from 33% and 37% respectively in 2007. Much of China’s import growth has been facilitated by higher Indonesian supply. In 2011, Indonesia accounted for 85% of the 59% increase in Chinese imports, and accounted for 80% of China’s total imports that year.

Since China was heavily reliant on Indonesian bauxite, imports were notably affected by Indonesian restrictions on raw material exports in place between May and November 2012. Total Chinese bauxite imports dropped 11% in 2012, with average imports from Indonesia dropping to 1.2mt/month in 2H 2012, just a third of average imports in the early part of the year.

Diversified Supply

In 1H 2013, Chinese bauxite imports surged to 33mt, up 64% y-o-y on an annualised basis. While aluminium production has risen by 10% in the year to date, imports have also been supported by some alumina producers attempting to build up stocks of imported bauxite, given that Indonesia may introduce further restrictions on unprocessed mineral shipments in 2014.

1H 2013 also saw a marked rise in imports from other bauxite suppliers, particularly Australia and India, as producers have tried to limit their exposure to Indonesian disruptions. Chinese imports from Australia rose 57% y-o-y in 1H 2013 to 6.7mt, while imports from India reached 3.4mt, up from just 1.3mt in full year 2012.

Domestic importers have also started to source bauxite from Atlantic countries. Since May 2012, China has imported several cargoes from Brazil, the world’s third largest bauxite supplier, which has historically mainly exported to the Americas and Europe. In late 2012, China’s first cargoes of African bauxite started to arrive, with imports from Ghana, Guinea and Guyana now standing at 1mt to date. Such diversification has increased the share of non-Indonesian suppliers in Chinese imports to 34% in 1H 2013.

Shipping Boost

While some Chinese alumina producers have embarked on Indonesian joint ventures in an attempt to ensure a steady bauxite supply, there remains a major risk to Chinese imports if Indonesia again limits exports in 2014. Despite the recent diversification, Indonesia remains China’s main bauxite supplier. However, there has been a tonne-mile benefit from China’s increased sourcing of more distant bauxite so far in 2013. Given the uncertainty over Indonesian policy, this trend seems likely to continue in the short-term if other bauxite suppliers can further boost shipments to China.