Prebaked Anode Poised to Keep Advancing in China, SMM Predicts

SHANGHAI, Feb. 21 (SMM) – Prebaked anode prices in China’s domestic market rose by about 620 yuan per tonne in January 2017 after Shandong Weiqiao raised its procurement price. 

SMM finds that the Chinese prebaked anode market has shifted from a seller’s market to a buyer’s market. Domestic prebaked anode prices advanced around 580 yuan per tonne as a whole in January, the highest in recent years. 

The rising strength is continuing into February. At present, ex-works prices of prebaked anode are 3,200-3,540 yuan per tonne in east China, up 105 yuan per tonne from January's level. 

SMM attributes the gain to following three factors. 

First, prices of petroleum coke and coal tar pitch, main raw materials of prebaked anode, have advanced all the way as crude oil and coking coal rose since November 2016. In Shandong, petroleum coke prices are up by about 300 yuan per tonne, and coal tar pitch prices surge by more than 1,100 yuan per tonne. 

Second, China’s Ministry of Environment Protection started latest environmental protection inspections for one month in Henan and Shandong from February 15. During the last round of inspections in Q4 2016, small carbon workshops in Henan, producing a total of 300,000 tonnes, were required to close permanently, and production at other producers was cut by 50 percent or suspended. The impact in Shandong from the inspections in Q4 2016 was smaller, but production restrictions were also required. The new inspections will cut output at carbon producers in Henan by 50 percent at the least, with some producers to close for one month. In Shandong, the latest round of inspections will mainly cover Dezhou and Jinan, with carbon production in the two regions to be cut by 50 percent at the most.

Third, approximately 5.30 million tonnes of new aluminum capacities will be commissioned in 2017, and aluminum producers, which have new aluminum projects online in 2017, have built up stocks for new capacities. Hence, supply in domestic prebaked anode market has been tight since January 2017. 

"Domestic prebaked anode prices are expected to gain by another 100 yuan per tonne in March due to high prices of raw materials and environmental factor,” SMM predicts.

Meanwhile, attention should be also paid to procurement price by Shandong Weiqiao. The company’s procurement price, which was the lowest level in the market for big purchasing volumes and quickest payment, was up significantly from January, and other buyers were forced to follow up. 

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