The feature chart tells a story that subscribers to our Weekly Carbon Monitor are already across. Since the start of January, prices have taken off. The lower quality material has risen by 17.5% in 2 months, and that’s on an 8-week moving average basis.
The thing is, anode prices are the last to react. Here’s the same chart from our Weekly Carbon Monitor for calcined coke.
The lower quality material, the blue line, has risen from RMB1200/t in November to over RMB1600 early February. And that’s an 8-week moving average. That’s a 33% increase in the space of 2 months. It’s no wonder that aluminum companies and carbon companies inside and outside China are responding.
We are hearing multiple reports of panicked reactions and sudden changes in purchase order quantities. Suppliers around the world are fielding enquiries from people looking for supply of calcined coke or anodes.
The question is, why?
Here’s the same chart from our Weekly Carbon Monitor for anode grade green coke.
Green coke prices have risen by up to 25% on an 8-week moving average basis. But green coke price is not the whole story, and the difference between the 25% rise in GPC price and 33% rise in CPC gives us a clue.
Calcining plants in China’s north and northeast are struggling to get approval to operate at full capacity. Several small plants were closed through the last couple of months last year, and that shortage of capacity is now starting to hurt supply of CPC. That in turn is now hurting China’s anode producers.
It’s slightly counterintuitive. The traditional narrative is that calcining capacity should never be a problem, and that supply of green coke is the most important factor. But right now, anode grade green coke is available, especially now right after the Chinese New Year break.
This is not just a China problem. China supplies roughly 20% of the rest of the world’s carbon for aluminum smelters. Aluminum companies around the world are now marshaling the troops and increasing their watch on what is happening. Some are also switching supply strategies.
After all, which purchasing manager anywhere in the world wants to be known as the guy who shut the smelter down because he failed to buy enough petcoke/ calcined coke/ anode supplies?
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