Guinea to Hurt Dry Bulk Trades

Guinea’s strike has interrupted bauxite loadings resulting in increased vessel supply in the Asia-Pacific and Atlantic basins

News ID: 80042

Date: 23 May 2018 - 11:04

According to MANA, THE force majeure declared by Guinea’s Societe Miniere de Boke bauxite mine will hurt dry bulk carrier demand and trades, as tonne miles for the segment remarkably increased since Guinea overtook Australia as the largest supplier of the ore to China.

A strike at Guinea’s SMB mine during the past 10 days has completely shut down bauxite production and equated to a total loss of production of 1.2m tonnes.

This development could deal a blow to the capesize, kamsarmax and panamax segments because bauxite trades are already plagued by the Chinese government’s commitment to curb air pollution and closedown of smelters and refineries that fail to meet new environmental regulations.

Global seaborne trade in bauxite, the primary ore used in the production of aluminium, is dominated by China’s imports.

China took in 68.8m tonnes of bauxite in 2017, slightly short of a 2013-high of 70m tonnes, according to brokerage house Banchero Costa.

Meanwhile, Guinea’s bauxite production has seen a rapid increase in recent years, facilitated by strong Chinese demand and investment.

Shipments from Guinea to China increased from virtually none in 2011, to 27.7m tonnes in 2017, the brokerage said in a note.

Overall Guinea’s bauxite exports to China had continued to more than double to 10.6m tonnes in the first quarter of 2018 compared with the same period a year ago.

According to the Banchero Costa, capesize spot rates fell around $5,000 due to the strike last week resulting in increased vessel supply across the Asia-Pacific and Atlantic basins.

Howe Robinson had similar views and said in its weekly report that rates fell across the board as the consequences of the force majeure in Guinea were felt across the segment and competition from the additional tonnage saw rates tumble further with C3 route dropping from $18.69 per day to $17.32 a day.

The C3 Brazil-China route ended the week at $17.28 down $1.73 from the close of the previous week.

Around, 11 vessels are waiting in Guinea’s Kamsar port for loading, Lloyd’s List Intelligence data shows.

Despite representing only 2% of the entire dry bulk trade, the bauxite trade between Guinea and China accounted for 13% of the total tonne-mile growth in 2017, as estimated by Clarksons.

With reduced volumes out of Guinea, it is increasingly likely that China would import more bauxite from Australia and Indonesia, potentially reducing tonne-mile demand.