Prebaked anode prices poised for further decline after April

SHANGHAI, Apr 3 (SMM) – Prices of prebaked anode in China, an essential material used in aluminium smelting, will face further downside risks after April as a negative impact on demand from the COVID-19 outbreak continues to weigh on prebaked anode profits. 

Shandong Weiqiao Group, the top aluminium producer in China, reduced the purchasing price for prebaked anode by 170 yuan/mt from March to 2,660 yuan/mt in cash for April. This followed it raised the benchmark prices for two consecutive months.

During the period after the extended Chines New Year holiday, prebaked anode prices pulled back after rebounded, in line with prices of petroleum coke, the main constituent of the anode. 

Petroleum coke prices have slipped about 35% from a post-holiday high level, which was bolstered by disrupted production amid the COVID-19 outbreak in China. While production returned with the spread of the virus slowing down, downstream demand failed to resume sufficiently to support a sustained rise in petroleum coke prices. 

Last month, the virus-driven plunges in base metal prices squeezed profits and drove more aluminium smelters to output cut or maintenance. 

The COVID-19 impact on prebaked anode exports from China was relatively non-significant in March. But the exports could be badly hit if an escalation in the outbreak overseas triggers large-scale production cut at foreign aluminium smelters. 

As of April 3, prices of spot prebaked anode in central China stood at 2,710-3,070 yuan/mt, with transportation costs and taxes included, down 170 yuan/mt from March 31, SMM assessed. 

Prices of prebaked anode in China by region (Source: SMM)