[SMM Analysis] what will be the trend of the pre-baked anode market since mid-October?

SMM, October 13, Weiqiao again lowered its pre-baked anode base purchase price to 2900 yuan / ton (spot exchange), a further 25 yuan / ton month-on-month decline, has recorded a decline for the fourth month in a row. According to SMM research, other electrolytic aluminum enterprises are likely to lower their anode procurement prices.

Figure 1. Weighted price of SMM prebaked anodes for 2016-2019

Source: SMM

Mid-October has arrived, what will be the trend of the pre-baked anode market? At the cost end, the price of petroleum coke has stopped falling since late September, and the price of coal tar pitch is still hovering at a low level. On the supply side, the operating rate of commercial prebaked anode enterprises decreased slightly in September compared with the previous month, and there were two main reasons. First, Weiqiao affected its electrolytic aluminum production due to flood accident, and the unexpected reduction of anode demand restrained the output of peripheral carbon supply plants. Second, under the influence of the National Day military parade, most anode production enterprises in Shandong, Hebei, Henan and other regions limited production by 30% to 50% from 0: 00 on September 24 to 24:00 on October 3, and transportation was also restricted, affecting the output of some enterprises in September. In terms of environmental protection, all localities have lifted the weather warning of heavy pollution during the National Day period, and most enterprises in the northern and Jiangsu regions have resumed the level of work before production restrictions. Carbon enterprises in Hubei will limit production by 50% this month and return to normal next month as a result of the Wuhan military Games. The new heating season has dropped to, however, local governments and relevant environmental protection departments have not yet come out of Taiwan specific policies, SMM still maintains the previous point of view, environmental protection production restriction policy tends to be flexible year by year, and most start-up carbon enterprises have completed environmental protection transformation, this round of heating season production limit is expected to be relatively limited. On the demand side, most of the electrolytic aluminum enterprises are not willing to stock up substantially, and the anode inventory level of aluminum enterprises in southwest China is also higher than that in the second and third quarters; SMM research statistics showed that the release rate of new and resumed production capacity was slower in the fourth quarter, superimposed on the previous accidents in Guangxi and Shandong, which led to an unexpected reduction in production, and on the whole, the demand side was difficult to rise significantly in the fourth quarter.

Compared with the annual trend of anode prices from 2016 to 2019, we can see that the fluctuation range of pre-baked anode prices has narrowed significantly this year. After a rapid reshuffle of the industry in 17 and 18 years, this year's pre-baked anode market has gradually returned to calm, and the sharp rise and fall of the market is difficult to reappear. For the future, SMM believes that as the price of petroleum coke rebounds slightly, it may stop the decline of the mainstream price in the anode market, while there is room for a small increase in the policy of limiting production or helping the anode price in the heating season.