Pre-baked Anode Output Dropped 3.5% MoM in December, Prices Likely to Rise Further in January

SHANGHAI, Jan 12 (SMM) - In the last 30 days (12.11-1.10), domestic prebaked anode prices continued their downward trend as the support from upstream raw materials weakened. The SMM weighted average price of prebaked anode was 5,140 yuan/mt, down 8.82% YoY.

Cost: In December, petroleum coke prices at local refineries in Shandong dropped before rising, and the monthly average price was recorded at 2,711 yuan/mt, down 17% YoY. From the beginning of this month, the downstream carbon industry actively stocked up and the in-plant inventory at petroleum coke refineries decreased rapidly, stabilising petroleum coke prices. The low-sulphur petroleum coke prices rose more significantly. By the end of December, the first batch of 2022 crude oil import quotas for non-state owned entities were released, 11% less than the first batch of quotas in 2021. The prices of modified asphalt were still falling in the range of 100-400 yuan.mt, and the negotiation of new orders was in a stalemate. The downstream enterprises procurement demand was also lacklustre. The support from the cost side in December is enough to fuel a new round of price hike of pre-baked anode in January.

Supply: According to SMM research, in December (31 calendar days), China's total prebaked anode output was about 1.174 million mt, down 3.54% MoM. And the average operating rate in December was recorded at 71.71%, down around 4.09% MoM. Also in December, all carbon enterprises in Zhengzhou area of Henan suspended their production, and there were production cuts in other areas of Henan. In Shandong, the production was reduced according to the degree of air pollution, but most of the carbon enterprises have B grade and above business rating, coupled with the various export exemptions and other national policies, the actual production reduction was minimal. Ningxia, on the other hand, has implemented a 30% reduction in production from the end of November due to excessive energy consumption.

Market forecast: Looking into January, the petroleum coke prices rebounded sharply. The coke prices in Shandong returned to the highs recorded in September last year. As of the time of this report, the SMM Shandong 3 # A petroleum coke average price recorded 3165 yuan/mt, up 360 yuan/mt compared to the beginning of the month. Modified asphalt prices also rallied amid multiple bullish factors. On the supply side, the winter Olympic Games and various environmental protection measures continue to affect the production, disrupting the production of some pre-baked anode enterprises. Downstream aluminium companies in the Europe have little demand for China pre-baked anode, although production cuts are frequent, the overall impact on domestic anode demand is insignificant. The slowly expanding aluminium capacity in Southeast Asia and China continue to favour the domestic anode demand.

In summary, the pre-baked anode market demand is promising, and the supply reduction estimate remains. And the cost side continues to offer support to pre-baked anode prices, which are expected to rise further in January.