SMM, August 6:
Raw material side: trading in China's petroleum coke market remained strong this week, with performance diverging across grades and overall prices holding up well. Refinery side, major refineries firmed steadily, supporting the market. Auction transaction prices for petroleum coke at CNOOC's various plants continued to climb, with gains concentrated at 30-160 yuan/mt. Downstream anode material enterprises showed strong buying interest, boosting coke prices. In PetroChina's north-east China operations, in-factory inventory of low-sulphur petroleum coke was low. Coupled with the concentrated release of downstream rigid demand, EXW prices were raised by 100-300 yuan/mt this week. At Sinopec refineries, downstream procurement demand recovered, and coke cargoes for anode-material and energy-storage applications in the Yangtze River region shipped smoothly, continuously underpinning the market. Sinopec's petroleum coke offers continued to move higher. Overall shipments from independent refineries were moderate. Prices were strong initially and then weakened, with visible divergence emerging across different specifications. SMM's latest data showed that the No. 1 petroleum coke spot price index for north-east China came in at 4,551.51 yuan/mt, up 3.07% WoW; the No. 2 petroleum coke spot price index for Shandong came in at 4,274.42 yuan/mt, down 0.05% WoW; the No. 3 petroleum coke spot price index for Shandong came in at 3,884.73 yuan/mt, up 3.92% WoW; and the No. 4 petroleum coke spot price index for Shandong came in at 2,088.15 yuan/mt, down 0.23% WoW. Recently, operating rates at China's refineries picked up and market supply increased. However, demand-side purchasing interest remained moderate; coupled with stockpiling and restocking by downstream enterprises early in the month, this provided support. High- and low-sulphur grades continued to diverge, and petroleum coke prices are expected to consolidate at highs in the short term. The coal tar pitch market continued to hold up well this week. As of this Thursday, the average coal tar pitch price was 4,876.67 yuan/mt, up 3.47% from last Thursday. Overall, cost-side support for prebaked anodes continued to strengthen this week.
Supply side, prebaked anode enterprises maintained a production pace based on sales. New anode projects in Xinjiang, Guangxi and other regions came online one after another, and new capacity continued to be released. Meanwhile, some enterprises saw operating rates pull back slightly due to maintenance, but overall the industry's supply capability improved steadily and supply flexibility strengthened further. Demand side, China's operating aluminum capacity remained high, providing steady, rigid support for prebaked anode consumption. Export side, new aluminum projects in Indonesia continued to come online, driving continued improvement in China's anode exports. Overall, China's new prebaked anode supply continued to materialize, high operating rates at downstream aluminum enterprises effectively underpinned domestic demand, and the export market improved at the margin. The industry's overall supply-demand balance remained stable, but as new capacity continued to be released, supply grew slightly faster than demand and the competitive landscape became increasingly intense.
Brief comment: This week, China's prebaked anode raw material side improved in tandem, and the industry's overall production cost rose. According to SMM data, as of August 6, China's prebaked anode production cost was 5,723.68 yuan/mt, up 2.26% from last Thursday. In terms of prices, China's prebaked anode prices mainly edged down in August. The August prebaked anode tender price at a large aluminum producer in Shandong fell 53 yuan/mt MoM, while quotes from a major domestic prebaked anode sales enterprise showed an upward trend, up 59 yuan/mt MoM. Looking ahead, cost-side support remains in place: petroleum coke still has relatively strong bottom support, coal tar pitch market conditions are improving in tandem, and raw materials overall provide fairly good support for anode costs. Supply-demand side, high operating rates at China's aluminum enterprises continue to underpin domestic anode demand, and export orders are recovering at the margin, bringing incremental growth. However, the concentrated release of new industry capacity and sustained supply expansion are further intensifying market competition. Going forward, close attention should be paid to changes in the supply-demand pattern and price trends of prebaked anodes and upstream raw materials.
