Petroleum Coke Divergence Pattern Becomes Prominent, Prebaked Anode Overall Cost Edges Down Slightly [SMM Prebaked Anode Weekly Review]

SMM, August 13:

Raw material side: this week, trading activity in China's petroleum coke market was moderate, while market divergence intensified; low-sulphur petroleum coke prices continued to rise, while medium- and high-sulphur petroleum coke prices were under pressure. At CNOOC refineries, auction transaction prices for petroleum coke were steady to higher; purchasing demand from downstream anode material producers remained in place, boosting coke prices. PetroChina's in-factory inventory of low-sulphur petroleum coke in north-east China was low, and its EXW prices were raised by 50-60 yuan/mt this week. At Sinopec refineries, downstream purchasing demand recovered; supported by buying from anode material producers, low-sulphur petroleum coke cargoes in the Yangtze River region saw smooth shipments and continued to underpin the market, while Sinopec petroleum coke offers continued to be raised. Overall shipments from independent refineries were moderate. As downstream restocking at the beginning of the month came to an end, the rise in medium- and high-sulphur petroleum coke prices slowed, and some prices came under pressure. The latest SMM data showed that the #1 petroleum coke spot price index in north-east China came in at 4,602.78 yuan/mt (up 1.13% WoW), the #2 petroleum coke spot price index in Shandong at 4,281.67 yuan/mt (up 0.17% WoW), the #3 petroleum coke spot price index in Shandong at 3,822.90 yuan/mt (down 1.59% WoW), and the #4 petroleum coke spot price index in Shandong at 2,069.45 yuan/mt (down 0.90% WoW). During the week, some domestic refineries completed maintenance and resumed operations, lifting refinery operating rates; market supply continued to increase, but demand-side purchasing interest was moderate. In particular, anode material producers continued to buy, supporting further gains in low-sulphur petroleum coke prices; rigid restocking demand for carbon used in aluminum production remained, forming a floor for medium-sulphur petroleum coke. Petroleum coke prices are expected to remain divergent in the short term, with low-sulphur petroleum coke relatively firm and medium- and high-sulphur petroleum coke mainly consolidating. This week, the coal tar pitch market remained strong. As of this Thursday, the average coal tar pitch price was 4,960 yuan/mt, up 1.71% from the previous Thursday. Overall, cost support for prebaked anode remained in place this week.

Supply side: prebaked anode producers continued to produce based on sales; new projects in Xinjiang, Guangxi and other regions were commissioned one after another, with new capacity being released continuously. Some producers saw operating rates pull back slightly due to maintenance, but the industry's overall supply capability improved steadily. Demand side: China's operating aluminum capacity remained high, providing stable rigid support for anode consumption. Exports: new aluminum projects in Indonesia continued to be commissioned, boosting China's anode exports. Overall, high operating rates in the aluminum sector effectively underpinned domestic demand, and the export market improved marginally; however, the concentrated commissioning of new capacity made supply grow slightly faster than demand, intensifying market competition.

Commentary: This week, raw material prices in China's prebaked anode market diverged, and the industry's overall production cost edged down. According to SMM data, as of August 13, China's prebaked anode production cost was 5,697.23 yuan/mt, down 0.47% from the previous Thursday, mainly because weakening medium- and high-sulphur petroleum coke dragged down raw material costs, while firm coal tar pitch partially offset this. Looking ahead, cost-side floor support remains, but upward drivers are insufficient: low-sulphur petroleum coke is firm, medium- and high-sulphur petroleum coke are consolidating, and coal tar pitch prices are strong; overall, raw materials underpin anode prices but are unlikely to push costs upward. On the supply-demand front, high operating rates in the aluminum sector continued to underpin domestic demand, and export orders recovered at the margin, bringing incremental demand; however, the concentrated commissioning of new industry capacity and the continued expansion of supply further intensified market competition. Going forward, close attention should be paid to changes in supply-demand patterns and price trends of prebaked anode and upstream raw materials.