Prices of Prebaked Anode Unlikely To Stop Falling In Short Term amid Weak Raw Material Market

An aluminium giant in Shandong province lowered its May benchmark purchase prices of prebaked anode by 850 yuan/mt MoM to 4,525 yuan/mt (cash payment). As of May 12, SMM prebaked anode prices stood between 4,525-7,800 yuan/mt in east China and 4,975-5,345 yuan/mt in north-west China.

Raw materials: Petroleum coke prices moved rangebound during April 10 and May 10, and the market transactions improved compared with the previous month. Downstream carbon plants still purchased as required. Petroleum coke stocks at domestic ports were still at a high level, exceeding 5 million mt to reach a new high as of the week ending May 5. This ensured ample supply of petroleum coke in the market. Inventories at mainstream refineries were low thanks to brisk trades. Local refineries’ shipments improved, and the downstream purchasing interest improved ahead of Labour Day holidays. Coke prices inched higher in late April, and moved rangebound as a whole. In terms of asphalt, the cost support weakened as the prices of raw material high-temperature zetar dropped sharply. During the month, as zetar deep-processing enterprises further resumed production, the supply of asphalt increased. But the prices of downstream prebaked anodes continued to fall, and downstream enterprises purchased cautiously. In this scenario, asphalt prices dropped further during the month.

Supply: During the month, the production of prebaked anode enterprises dropped slightly, and producers focused on destocking against a large inventory of finished products, under the rising pressure exerted by the long-term price declines of prebaked anode. Some companies have suffered losses and thus lacked enthusiasm for production, while some companies undertook maintenance. Supply thus fell.

Demand: The operating capacity of aluminium smelters gradually recovered to about 40.6 million mt during April 10-May 10. Although aluminium smelters in Guizhou, Sichuan, and Guangxi gradually resumed production, the actual output was limited. The low reservoir level in Yunnan kept power supply in deficit. No local smelters are expected to resume production in May, and the increase in demand for prebaked anodes will be insignificant.

In summary, the prices of prebaked anodes fell for six consecutive months, with a cumulative decline of 2,675 yuan/mt and a year-on-year drop of about 40%. On the whole, the prebaked anode prices fell along with raw materials prices. As a result, most enterprises struggled to make profits, and some already suffered losses. So far, the petroleum coke market has not had a significant boost. The high port inventory, combined with the sharp fluctuations in the asphalt market, will continue to lower prebaked anode prices in June. As of May 12, SMM calculated that the prices of prebaked anodes had dropped 380 yuan/mt since April 26.

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