Australia has remained a key supplier of bauxite to China, but is facing increasing competition from Malaysia and Guinea, according to a report prepared jointly by Australian government's Department of Industry, Innovation and Science and Westpac Institutional Bank.
The China Resources Quarterly report released Thursday said China imported 13.6 million mt of bauxite in the first quarter of 2016, rising 36% from the same 2015 period but was 20% less than the December quarter.
Imports from Australia reached 4 million mt in the March quarter, contributing to 29% of the Chinese total.
This is significantly lower than the 49% share recorded a year earlier.
The volume of Australian bauxite supplies to China has also slipped from 4.5 million mt in October-December last year and 4.9 million mt in the first three months of 2015. Fuelling the 36% yearly jump in China's bauxite imports during the March quarter was increased supplies from Brazil (up 256%) and Malaysia (up 79%), according to the report.
Despite being the principal source of China's bauxite imports in 2015, Malaysia's market share in the March 2016 quarter decreased 15 percentage points from the previous quarter to 33% as the Malaysian government limited supply growth to address socio-environmental concerns.
Guinea has emerged as a key competitive supplier. During the March quarter, China sourced 1.7 million mt of bauxite from the West African nation, up 519% from the December quarter and 1,700% on the year.
Indonesia is a wild card to the supply side of China's bauxite market, according to the report.
The Indonesian government is planning to amend its bauxite export ban rule implemented since early 2014 and allow Indonesian bauxite producers to resume exports to China in the second half of 2016.
Prior to the export ban, Indonesia was the largest source of China's bauxite imports.
"The change is likely to increase the supply available for China's bauxite import markets and put further pressure on Australia's bauxite exporters," the report noted.
The world's second-largest bauxite producer, China mined 65 million mt in 2015, unchanged from 2014.
China's alumina imports from Australia also fell to 703,000 mt in the March quarter, down 29% from the December quarter.
During the comparison periods, overall alumina imports by China fell by a smaller extent of 18% to 1.24 million mt, data from the report showed.
While Australia remained the principal source of alumina imports for Chinese smelters, its market share fell by more than eight percentage points to 56.7% in the March quarter this year from 65% in the previous quarter, with the CRU citing increased sourcing from Brazil and Vietnam by China.
