Short Month Hinders February Prebaked Anode Production Increase, Resumed Operations Struggle to Reverse Production Decline [SMM Analysis]

SMM March 16 News: According to SMM survey and calculations, China's prebaked anode production in February 2025 was 1.8352 million mt, down 3.64% YoY and 1.71% MoM. Among them, the production of supporting prebaked anodes was 836,400 mt, while commercial prebaked anode production was 998,800 mt. In February 2025, the operating conditions of domestic prebaked anode enterprises slightly improved. The main reasons included the resumption of production by some enterprises in Henan and Shandong due to the relaxation of environmental protection policies and the commissioning of new capacity, as well as the resumption of production by other enterprises in other regions after maintenance. Additionally, the resumption of production by a certain enterprise in Fujian further contributed to the supply-side growth of prebaked anodes. However, as February is a short month, the overall production increase was somewhat limited. According to SMM calculations, the industry's operating rate in February was 73.18%, down 1.47 percentage points MoM. Domestic demand: By the end of February, SMM statistics showed that China's aluminum existing capacity was approximately 45.81 million mt, with an operating capacity of about 43.64 million mt. The industry's operating rate increased by 0.07 percentage points MoM and 2.26 percentage points YoY to 95.3%. Currently, the operating capacity of domestic aluminum smelters is in a slight growth range. After aluminum profits recovered during the month, several previously curtailed enterprises in Sichuan and Guangxi resumed production successively in early February. Additionally, a capacity replacement and upgrade project at an aluminum smelter in Qinghai started production, contributing to the growth momentum of subsequent aluminum operating capacity. Entering March 2025, domestic aluminum operating capacity is expected to rise again as related enterprises reach full production, with annualized operating capacity stabilizing at 43.84 million mt/year by the end of March. Overseas demand: In 2024, China's prebaked anode exports showed robust growth. Even in December, when export volumes declined to some extent, they remained at high levels. Notably, export orders to the UAE and Indonesia increased by over 100%, fully demonstrating the robust demand in these markets. Looking ahead to 2025, based on feedback from enterprises regarding order conditions, the outlook is generally optimistic, indicating that total exports are expected to rise steadily. Given the anticipated increase in raw material petroleum coke prices in 2025, the price center of prebaked anode exports is also expected to gradually rise, which is undoubtedly a positive signal for the entire industry. Overall, despite the challenges posed by raw material market fluctuations, China's prebaked anode exports in 2024 achieved remarkable results and are expected to maintain a positive growth trend in 2025, continuing to expand broader development opportunities in the global market. Brief Comment: In February 2025, prebaked anode production continued to decline, but overall operating conditions improved compared to the previous month. However, as February is a short month, overall production did not increase significantly. Currently, prebaked anode enterprises are producing according to orders, and industry supply remains relatively sufficient. On the demand side, prebaked anode demand is expected to perform well in March as aluminum enterprises reach full production. Additionally, overseas order conditions for 2025 are relatively optimistic, with an overall positive demand outlook. In the short term, prebaked anode enterprises are primarily focused on ensuring supply, while downstream aluminum enterprises' operating rates are slightly increasing. SMM expects that prebaked anode enterprises' operating conditions may increase slightly in March, and further attention will be paid to the operating conditions of prebaked anode and downstream aluminum enterprises.