Petroleum Coke Downtrend Eases Prebaked Anode Costs, Strong Demand Boosts High Operating Rate in the Industry [SMM Prebaked Anode Weekly Review]

SMM, March 6:

Raw Material Side: In the petroleum coke market, refinery petroleum coke sales showed no significant improvement, and petroleum coke prices continued to weaken. Specifically, CNOOC's refinery petroleum coke tender prices were significantly reduced WoW, with adjustments ranging from 250-500 yuan/mt, and current ex-factory prices are at 5,000-5,500 yuan/mt. PetroChina's petroleum coke prices in north-east and north China were also significantly reduced at the beginning of the month, with reductions ranging from 340-500 yuan/mt, and current ex-factory prices are at 5,170-5,610 yuan/mt. Sinopec's petroleum coke prices remained largely stable. For local refineries, downstream purchases showed no significant improvement, leading to slight price differentiation, with an overall downward trend. Currently, the average price of petroleum coke from local refineries is approximately 2,864 yuan/mt, down 3.12% WoW as of Thursday. In the coal tar pitch market, prices showed slight strengthening within stability. As of Thursday, SMM data indicated that the average price of coal tar pitch was 4,671 yuan/mt, up 1.3% WoW. Overall, the continued decline in petroleum coke prices has weakened the cost-side support for prebaked anodes.

Supply side, prebaked anode producers mostly arranged production based on orders. According to SMM's survey, some companies gradually resumed capacity previously reduced due to environmental protection-related controls, while production recovery at certain companies also contributed to increased output, adding some supply to the prebaked anode market. Additionally, some companies in Shandong received news of stricter environmental protection-related controls, which may slightly restrict production. Overall, prebaked anode supply remains relatively sufficient, with a slight increase expected. Demand side, the operating capacity of the domestic aluminum industry steadily increased. Although the growth was relatively small, it injected positive momentum into domestic demand for prebaked anodes, with demand showing an optimistic trend.

Brief Comment: Recently, petroleum coke prices have continued to decline, particularly with significant reductions in local refinery petroleum coke prices. Despite support from early-month stockpiling and restocking by enterprises, the price decline at local refineries has triggered a wait-and-see sentiment downstream, which has somewhat suppressed upward momentum in prices. As a result, the overall market prices have struggled to show a clear upward trend, instead remaining relatively stable at high levels with slight weakening. This has gradually loosened the cost-side support for prebaked anodes. According to SMM data, as of March 6, the cost of prebaked anodes in China had dropped to 6,032 yuan/mt, down 0.47% WoW. During the week, prebaked anode prices for March were finalized, with market attention focused on a benchmark company's tender price increase of 956 yuan/mt. Although prebaked anode prices were significantly raised, they could not offset the pressure from rising raw material petroleum coke prices, leading to some compression in corporate profitability. However, it is worth noting that the operating rate of aluminum smelters is maintaining a steady upward trend. This trend provides strong support for prebaked anode market demand, keeping the overall operating rate of the prebaked anode industry at a high level. In the long term, this trend is expected to alleviate some of the pressure faced by the prebaked anode market and bring a relatively positive impact on future price trends.

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