July Price Edging Up Realized, Cost Center Pulls Back During the Week [SMM Prebaked Anode Weekly Review]

SMM, July 2:

Raw Material Side: This week, the domestic petroleum coke market saw average shipment performance, with prices showing mixed performance during the week. Indicators continued to diverge, and the price center declined somewhat. Specifically, this week, transaction prices for petroleum coke at CNOOC’s Binzhou refinery were largely stable, Taizhou Petrochemical resumed operations mid-week, and the Zhoushan Petrochemical unit remained shut down for maintenance. Prices for low-sulphur petroleum coke from PetroChina’s affiliates in north-east China were generally stable with a slight rise, petroleum coke prices at Sinopec’s refineries were broadly stable, and shipments from local refineries performed poorly, with petroleum coke prices falling under pressure. The latest SMM data showed that the Shandong 2# petroleum coke spot price index was recorded at 4,067.69 yuan/mt, down 1.49% from last Thursday; the Shandong 3# petroleum coke spot price index was recorded at 3,675.48 yuan/mt, down 3.28% from last Thursday; and the Shandong 4# petroleum coke spot price index was recorded at 1,908.99 yuan/mt, down 7.57% from last Thursday. Affected by concentrated maintenance at some refineries, the operating rate of China’s coking units stayed low in early July, tightening domestic petroleum coke supply further. Demand showed structural divergence. High aluminum operating rates provided stable support for prebaked anode demand, and carbon enterprises’ monthly restocking led to improved transactions for medium-sulphur petroleum coke; anode material enterprises continued to focus on cost control and purchasing as needed, and upward momentum for low-sulphur petroleum coke prices was relatively insufficient. The petroleum coke market is expected to remain divergent in the short term. The coal tar pitch market held up well this week. As of this Thursday, the average price of coal tar pitch was 4,875 yuan/mt, up 1.46% from last Thursday. Coal tar prices stayed high and stagnant, the operating rate of deep-processing enterprises edged up slightly, and supply increased marginally; downstream anode enterprises mainly restocked as needed at the start of the month, with a stalemate between sellers and buyers continuing. Raw material cost support remained, but demand growth was limited, and the coal tar pitch price is expected to continue consolidating with a generally stable but slightly firm tone in the short term. Overall, cost support for prebaked anodes weakened slightly this week compared to the prior period.

Supply side, prebaked anode enterprises continued their production pace of producing based on sales. New anode projects in regions like Xinjiang and Guangxi came on stream in succession, with new capacity being released continuously; meanwhile, some enterprises saw their operating rates pull back slightly due to maintenance, but overall, the industry’s supply capability improved steadily and supply flexibility increased further. Demand side, China’s operating aluminum capacity stayed high, forming steady and rigid support for prebaked anode consumption. On the export front, new aluminum projects in Indonesia continued to come on stream, driving a MoM improvement in domestic anode export orders to Southeast Asia; the geopolitical situation in the Middle East eased somewhat with no signs of further deterioration. If the regional situation remains stable, production at affected aluminum enterprises is expected to recover gradually, leading to a recovery in anode procurement demand. Overall, new domestic prebaked anode supply continued to be delivered, high operating aluminum rates effectively supported domestic demand, and the export market improved marginally. The industry’s supply and demand remained generally stable, but as new capacity continued to be released, market competition will stay high.

Summary: This week, China’s prebaked anode raw material market trend diverged. Affected by the retreat of the petroleum coke price center, the overall cost of prebaked anodes continued to shift lower. According to SMM monitoring, as of July 2, China’s prebaked anode cost was approximately 5,460.36 yuan/mt, down 1.64% from last Thursday. On the price side, domestic prebaked anode prices edged up in July. A large aluminum smelter in Shandong raised its July prebaked anode tender price by 30 yuan/mt MoM, and a major domestic prebaked anode sales enterprise raised its quote by 13 yuan/mt MoM. Looking ahead, the petroleum coke market will continue to show structural divergence, coal tar pitch prices will hold up well, and overall support from the raw material side will remain relatively firm; regarding supply and demand, China’s high aluminum operating rates will support demand, and export orders improved marginally. However, as new capacity continues to be released, industry competition will stay high. Future focus should be on changes in the supply-demand pattern and price trends of prebaked anodes and upstream raw materials.