Bauxite and alumina represent a crucial part in global mineral trade and account for a significant share of global resource-based exports. In 2013, dry bulks remained the mainstay of dry cargo trade, with the five major bulk commodities (iron ore, coal, grain, bauxite and alumina, and phosphate rock) accounting for 44.2 per cent (2.92 billion tons) of the total volume of dry cargo and minor bulks (forest products and the like) making up 21 per cent (1.4 billion tons).

Last year, growth in bauxite trade as measured in ton-miles increased as a result of a 25.7 per cent increase in shipments to China. This growth was driven by China's rapid expansion in alumina production capacity, as well as the limited supply and the substandard quality of China's bauxite reserves.

China is highly dependent on bauxite imports, in particular from Indonesia whose restrictions - introduced in January 2014, but continued throughout the year - relating to the export of raw materials have created uncertainty for markets.

As a result, China has been sourcing bauxite from other locations such as Australia, India and other regions, as illustrated by the first African bauxite shipments, including from Ghana and Guinea, as well as from Guyana, received in 2012.

Bauxite exports from Indonesia accounted for half of the global bauxite trade before the restriction came into effect and almost 70 per cent of Chinese imports.

Although a greater proportion of imports are being sourced from distant locations, such as Africa and Latin America, supply from these markets is, nevertheless, has not fully made up for the drop in Indonesian exports. As a result, some companies have announced plans to build alumina refineries in Indonesia in response to restrictions imposed on unprocessed mineral ore exports.

Now that the year has come to a close, it has become evident that Indonesia's bauxite export ban has tightened that market. At the same time, the large Chinese stockpile of the ore used to make alumina is eroding. It is worth noting that although China still has a domestic surplus of aluminium, it may move into a deficit outside of China as soon as Q1 2015.

In this respect, the demand dynamics of the Chinese market will be the critical factor contributing to how the price of alumina develops in 2015.

Looking at the broader macroeconomic trends, it seems likely that 2015 will be the year of weakened Chinese demand. Disinflationary pressures are likely to prompt more aggressive easing. It seems that due to weak demand, spare capacity, and falling commodity prices, inflation is likely to stay below 2% in 2015. This will likely lead to more aggressive fiscal and monetary easing in 2015, perhaps leading to another two 25bps of symmetric rate cuts and three 50bps of reserve ratio cuts.

While weak demand is likely the primary driver of disinflation, supply side shocks may have also exacerbated the downward pressures on prices. It is highly significant that commodity prices, and crude oil in particular, have fallen quite sharply in the second half of this year.

At a conservative estimate, China will need around 130 million tonnes of bauxite next year to feed its fast-growing aluminium industry and must import around 35 million of that. In line with these expectations, mining companies have announced a number of new operations.

Earlier this month, Australia's first bauxite mine is set to open in northern Tasmania, which is expected to extract more than 1 million tonnes of bauxite over five years. In addition, Rio Tinto's aluminium division announced only last week that it is expanding its bauxite resources.

Further to these developments, bauxite mines are springing up in Malaysia and shipping ever-increasing amounts of the raw material used for aluminium to China, helping fill a gap since Indonesia banned ore exports in January in a bid to encourage value-added processing at home.