Capesize rates cracking past the $30,000 a day mark in recent days are in no small part down to the record amounts of bauxite heading from West Africa to China.
Bauxite is primarily used as the main source of aluminium. It is the only minor bulk that tends to be shipped on capesizes. The US Geological Survey estimates that Guinea’s bauxite reserves are the largest in the world.
During the second quarter, Greek broker Intermodal described an “unprecedented surge” in bauxite exports from Guinea, reaching a new record high of 38.01m tons, most of which heads to China. China’s primary aluminium production has also set a new record, achieving 17.77m tons in the first five months of 2024, a 5.4% increase compared to the previous record set in 2023 for the same period.
This increase is driven by strong demand from the solar power and electric vehicle industries, which collectively account for 44% of aluminium usage.
Bauxite volumes are also running “exceptionally strong” for this time of year, broker Arrow noted in a recent report, driven by favourable weather, increasing supply and strong demand. Although the rainy season in West Africa has started, it has been drier than usual so far.
“Given the limited new capesize fleet delivery schedule for this year (+2%), along with continued high growth in the long-haul bauxite trade (+10% run-rate during 1H24), Capesize vessel demand is growing notably above new supply, especially with the main cape cargo of iron ore growing strongly as well (+5% run-rate during 1H24),” Jefferies, an investment bank, noted in a recent report.
The extraordinary growth of the bauxite capesize trades out of Guinea has seen the route replace Brazil in terms of ton-days in the opening months of the year, according to data from broker BRS.
The Guinea to China bauxite trade route has now firmly entrenched itself as a “pivotal pillar” of capesize prospects, analysts at BRS noted, the growth in imports mirroring the People’s Republic’s remarkable ramp-up in electric vehicle output.
Guinea’s meteoric rise as a generator of bauxite for the Chinese market is set to be accompanied by its establishment as a major iron ore supplier for China in the coming years with the much-hyped opening next year of the Simandou iron ore mine.
Bauxite was discussed at this year’s Geneva Dry and is set to have greater prominence at the next edition of the world’s premier commodities shipping conference.
“West African bauxite has become much more important and is very much interlinked with iron ore in terms of volumes,” William Fairclough, managing director of Wah Kwong Maritime Transport Holdings, said at the iron ore session of the Splash-organised event.
