Market Review December 10

By: Paul Adkins | Comments: | Category: General

Alumina inventories are falling a little, thanks to the price continuously dropping. Meantime, other producers are simply holding back inventory from the market, rather than selling at current prices.

Imported product quoted price went up RMB100/tonne to RMB2300-2400/tonne, while the domestic non-Chalco alumina price rose RMB50/tonne to RMB2100-2200/tonne. The price from Chalco remained at RMB2600/tonne last week. But listed prices continue not to reflect the actual deal prices in the market, with some deals going down to RMB1900 in the last couple of weeks.

Aluminium price (Chalco) dropped RMB1000/tonne to RMB13,000/tonne last week, while the actual price was already down to RMB11,000/tonne, a ten year low.

The electricity cost for aluminium smelters started to drop last week. Yunnan province announced a new price of RMB0.06/kwh for non-ferrous metal enterprises from 1st Dec 2008. If electricity goes RMB0.01/kwh lower, then the cost for each one tonne of aluminum could decrease RMB150. Compared with last year`s price, the electricity price now is already RMB0.12/kwh cheaper. That means a RMB1800/tonne production cost decrease.

Even though the aluminum price is ready very low due to the production cost decreasing, still the market is very soft. According to latest data, China domestic aluminum inventory reached 1.1 million tonne 5th December. There is talk that the Chinese Government will buy a strategic stake out of this inventory.

Green petroleum coke
The market of GPC kept stable, with only small adjustments in certain regions.

The price of GPC in China east and south had small increases, while the price of Shandong local refineries fell slightly due to some local refineries resuming production. But some analysts pointed out the real trade price has not changed fundamentally.

The demand for GPC is still soft from downstream production, and with the New Year and Chinese lunar New Year coming, the demand situation will not improve. The demand of high sulphur GPC as fuel continued to increase. It plays a significant role for keeping the market stable.

The other reason for market stability is on the supply side. Sinopec and CNPC continued to lower production capacity. We understand the closed capacity of cokers in December has reached 3,400,000tonne/year, and another two cokers with annual capacity 1,600,000tonne and 1,200,000tonne respectively will be stopped this month too.

The export volume of GPC has enlarged since October, when it reached 122,000tonnes.

Calcined coke
Last week low sulphur coke kept stable at RMB1400-1600RMB/tonne. Moderate Sulphur coke kept stable at 1300-1500RMB/tonne;
Following the recent rise of high sulphur green coke price, last week high sulphur calcined coke price rose 100-200RMB/tonne to 1200-1300RMB/tonne. High sulphur calcined coke suppliers were still focus on exporting last week.

The anode market kept weakening last week. The domestic market was already weak ,and now with the foreign aluminum smelters cutting back, the export market demand for anode is weakening. Last week the anode market quoted price was RMB2600-3500/tonne, but in Shandong area the actual deal price was around RMB2600-2800/tonne. In Henan area the actual deal price was RMB2500-2700/tonne, It`s rumored that there are even lower prices in this area. In Shanxi area the actual price was about RMB2600-2700RMB/tonne. In Chongqing area the actual deal price was about RMB2800-2900/tonne, but the sales have been bad due to the smelter cut backs in this area. At the moment, the actual deal price in these areas is already back to 2006 levels.

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