Does Bauxite and the Indonesian Ore Ban Make Aluminum the Next Copper?

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The Financial Times’ Xian Rice believes that aluminum is poised for a strong run thanks to dwindling stockpiles of bauxite hoarded before the Indonesian export ban began in January.

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Between 2007 and 2013, Indonesia was responsible for 60 percent of global exports of bauxite, a clay-like soil type that is mined in bulk. Last year, China, the world’s largest producer and consumer of aluminum, obtained around two-thirds of its bauxite from Indonesia. But this year it may get virtually none. Bauxite is refined into alumina, a white powder, and then transformed via electrolysis into aluminum.

“Just like with nickel, there is no alternative supplier of bauxite of a sufficient scale and quality to replace the Indonesia material,” one Asia-based metals trader told the FT. “I think aluminum looks an interesting bet.”

The cash price of primary Indian aluminum saw the biggest increase at 1.0 percent, finishing at INR 110.70 ($1.88) per kilogram for Monday, June 9. On the LME, the cash price of primary aluminum declined 0.6 percent to $1,817 per metric ton. The aluminum 3-month price saw a 0.5 percent decline on the LME to $1,837 per metric ton.

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Chinese aluminum closed mixed yesterday. The Chinese aluminum cash price rose 0.8 percent to CNY 13,290 ($2,129) per metric ton. For the fifth day in a row, the price of Chinese aluminum scrap remained essentially flat at CNY 12,250 ($1,962) per metric ton. The price of Chinese aluminum billet held steady at CNY 13,590 ($2,177) per metric ton. The price of Chinese aluminum bar was unchanged at CNY 14,200 ($2,274) per metric ton.

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