Monthly Archives: October 2008
Green coke
Green coke prices continue to fall. Refineries are exhibiting the classic signs of the economic incentives of producing high value products at a time when the oil price is falling. Chinese refineries can now start to bring the costs back under the prices they can achieve for aviation gas, petrol and so on. With crude prices so low, they will maximise their throughput before the retail prices are reduced and their profit opportunity cut off. their only downside is that it means that resids continue to be produced and must be processed. The green coke is no longer attracting the high prices of even two months ago, but it’s a minute part of the equation.
Demand meantime continues to fall.
Calcined coke
Last week the calcined coke market continued its deterioration. The market price of low sulphur calcined coke dropped 800RMB/Ton to 2100-2500RMB/Ton, though the actual deal price was about 2000RMB/Ton. Even the price was already very low, the buyers were still just watching, Last week, there were few deals done.
Meantime, moderate sulphur calcined coke prices slipped to 1900 - 2300 RMB/ton, a drop of around 800RMB.
High sulphur calcined coke dropped 300RMB/Ton to 1700-2200RMB/Ton, but the actual deal price was already close to 1100RMB/Ton.
Aluminium
The price of aluminium in the China market now seems to have found a floor at RMB14,000, though this is well below the cash cost price of almost all smelters here. It is now at a point where the major producers including Chalco are holding a meeting with the National Development and Reform Commission (NDRC) to discuss the current situation for the industry.
Green Coke
The market for green coke suffered a severe decline after the national day holidays. The price of 1A dropped 500-600Yuan/ton, to 2100 - 2200yuan/ton, back to the level of September 2007.
Jinzhou and Jinxi refineries, where the coke is mainly 1B grade, came down to 1500-2000yuan/ton. Although the 1B price of Jilin petrochemicals kept above 2000yuan/ton, it expected to match other refineries’ price soon.
The 2A - 3A price of along Yanzi river was lower than other regions due to high stock level. The actual trade price of high sulphur coke even fell to 1000Yuan/ton on some trades. Since many smelters increased environmental protection measures, it increased the pressure on high sulphur coke prices. Some refineries with their own electricity power plant increased the quantity of high sulphur coke as fuel. However, the market was still over supplied.
The operating rate of Shandong local refineries went down further. Some refineries currently undergoing overhaul are now revising their re-start dates.
Calcined coke
Along with the green coke price dropping, last week the price calcined coke dropped a lot
Last week the price of low sulphur calcined coke dropped 900-1000RMB/ton to 2900-3200RMB/ton, while moderate sulphur coke price slipped 250-350RMB/ton to 2800-3000RMB/ton. High sulphur calcined coke dropped 450RMB/ton to 2000-2200RMB/ton.
Anode
Due to the aluminum market weakness, the market demand for anodes kept decreasing. Nevertheless, the inventory level is still rising, and some foreign aluminum buyers also started to cut back. The outcome is that the price of anode dropped 100RMB/ton to 4200-4400RMB/ton last week.
Alumina
Last week alumina price kept stable. China imported alumina CIF prices are still between 390-400US$/Ton. The imported Alumina quotation didn`t change (3300-3350RMB/ton). The Domestic Alumina price is still 2750-2850RMB/ton (Non-Chinalco). The price from Chinalco stayed at 2900RMB/ton. Due to the aluminum smelters cut back, the demand for alumina keeps going down, while the inventory level was already high, so the price of alumina will fall further.
We are already seeing some alumina plants in China cutting back or stopping production. We will publish a separate post on this.
Aluminium
Last week the aluminium price from Chalco dropped 300RMB/ton to 14200RMB/ton, but in fact the price wavered around this mark through the week, dropping at one point to 13800. This price has caused some aluminium smelters about 2000RMB per ton operating loss. Small smelters are losing even more than this. There is no doubt more smelters will shut down.
An extract from today’s China Daily newspaper (online edition). Note that year-on year the Chinese GDP sits at 9.9%, which compares to the World Bank’s forecast in February this year that China would fall to 9.6% by the end of the year. The point being that China’s GDP number on a y-o-y basis is not so gloomy as the rest of the world is reading it. And third quarter GDP was severely affected by the Olympics restrictions, as we have been reporting. Here is the article.
China’s economy grew 9.9 percent year-on-year in the first three quarters of this year, according to official figures released on Monday, showing a trend of a slowdown amid the current global financial crisis.
In the third quarter, the gross domestic product (GDP) growth rate slowed down to 9 percent, the lowest in five years, from 10.6 percent in the first quarter, 10.1 percent for the second quarter and 10.4 percent in the first half of 2008.
China’s economic growth has been on a steady decline since peaking in the second quarter of 2007. The slowing world economy pummeled by the global financial crisis and weaker demand for Chinese exports on international markets heavily weighted on the Chinese economy, according to Li Xiaochao, spokesperson for the National Bureau of Statistics.
“However, the Chinese economy has maintained stable and relatively fast growth this year as the 9.9 percent growth rate in the first nine months was still higher than the annual average growth rate of 9.8 percent since China adopted the reform and opening policy in the late 1970s,” Li said.
Another widely watched indicator, the consumer price index (CPI) — an important measure of inflation — rose 4.6 percent in September, over the same period last year.
The figure, coupled with 7.1 percent in June, 6.3 percent in July, 4.9 percent in August and a nearly 12-year-high of 8.7 percent in February, shows the CPI in a downward spiral.
Analysts mainly attribute the decline in the CPI to ample grain supply and lower-than-expected income growth of Chinese residents, as the housing and stock markets take heavy toll, which dented residents’ desire to consume.
Chinese stocks have shed nearly 70 percent of their value from the last year’s peak at 6,124 points due to weak investor confidence.
Exports, one of the three major drivers of the Chinese economy along with investment and consumption, are taking hit from the global financial turmoil and economic slowdown. In the first three quarters exports grew 22.3 percent, 4.8 percent points lower than the same period last year.
Fixed assets investment totaled 11.6246 trillion yuan ($1.66 trillion) in the first three quarters of 2008, up 27.0 percent over the same period last year, according to the bureau.
The growth rate was 0.7 percentage points higher than the first half of this year, or 1.3 percentage points higher than the year-earlier level.
Another key economic indicator, retail sales, increased by 22 percent year-on-year in the first three quarters and climbed 23.2 percent in September alone. Analysts say China would have to further stimulate domestic consumption in order to push the economy forward amid an export slump.
“China still has huge potential and leeway to expand domestic consumption,” Li said.
The combination of an economic slowdown and easing inflation may give rise to louder calls for loosening the monetary policy and adopting a more proactive fiscal policy.
The State Council said on Sunday China’s economy can weather the effects of the global financial turmoil, but growth will decline as business profits and public revenues slow.
In a statement at the end of an executive meeting presided by Premier Wen Jiabao, it said the global turmoil and economic instability will have a “gradual” effect on the country.
It said China’s economic growth will slow along with corporate profits and public revenues, and as capital markets continue to fluctuate.
“Unfavorable international factors and the serious natural disasters at home have not changed the basic growth situation of our country’s economy,” said the statement posted on a government website. “Our country’s economic growth has the ability and vigor to resist risks.”
China must “adopt flexible and cautious macroeconomic policies” to maintain stable growth, the statement said.
The State Council said that in the fourth quarter, China should focus on developing the rural economy, while striving to control inflation.
Green coke
At the end of September, the domestic Green coke inventory level was very high, and many refineries had “before Vacation promotion”, in order to sell more products. But it didn`t work out, and the downstream companies are now waiting to see how far this price cutting can go. The first 12 days of October therefore have seen prices continue to tumble as inventory levels have risen.
From 26th Sept to 10th Oct:
Low Sulphur Green Coke:
1#A has dropped 450RMB/Ton to 2600-2700RMB/Ton;
1#B dropped 420-780RMB/Ton to 2050-2600RMB/Ton.
Moderate sulphur green coke:
2#-3#A North of China and Shandong dropped 200RMB/Ton to 2200-2600RMB/Ton;
along Yangzi river region prices dropped 250-270RMB/Ton to 2000-2220RMB/Ton;
Shandong local refinery lowered down the most, dropping 400RMB to 1600-2300rmb/Ton;
3#B dropped 50-100RMB/Ton to 1850-2100RMB/Ton.
High sulphur green coke price dropped 550-200 RMB/Ton to 1050-1650RMB/Ton in last two weeks.
Calcined coke
At present, those Calciners who cut back during Olympic Games have increased their output, requiring more green coke, but because of the situation in the domestic aluminum market, there is still pressure on Carbon products market price.
Due to the price dropping for green coke, low sulphur calcined coke price went down as well. The price of Low sulphur calcined coke dropped 800-900RMB/Ton in last two weeks to 3900-4100RMB/Ton. Many factories started to cut back. Dongbei Linhaiziguang Carbon Factory stopped producing.
Moderate Sulphur coke price slipped a bit to 3150-3250RMB/Ton from 3150-3350RMB/Ton;
High sulphur calcined coke dropped 200-250RMB/Ton to 2450-2650RMB/Ton.
Anode
In line with the falling demand of aluminum smelters, in the last two weeks anode prices dropped 100RMB/Ton 4300-4500RMB/Ton. Due to the aluminum market weakness, the market demand of anode is decreasing while the inventory level is rising. Some factories have now stopped producing, such as Hengyu Carbon and Xinghua Carbon. Qingyang Yellow River Carbon, Huihao shiye and Changhong Carbon cut back by varying amounts, as have Shandong Zibo Lianxin, Fengyuan Carbon, Qianhao Carbon and Hongchang Carbon.
If you would like more information about the Calcining market in China, please feel free to contact us.
Watch out for your copy of the latest Black China Report, which was published today.
This month’s report includes a special section which looks at the Chinese coal industry, as well as the Chinese’ Government’s strategy for urbanisation.
In the current market turmoil around the world, all eyes are watching to see what the Chinese Government will do. Will it protect its foreign reserves, estimated at more than US$2 trillion, by continuing to prop up the US Banks. Remember it was China that bought many of the bonds that were issued to cover Freddie Mac and Fannie Mae, as well as its investments in several other US banking companies. Or will China use its massive reserves to pick up bargains around the globe. With its huge appetite for raw materials, grains, energy and other scarce resources, will China act now to lock in assets for its future?
The answer lies ahead of us, but here at AZ China, we will be watching and reporting as events unfold.
We will post news items as they come to hand.
Not a subscriber to the Black China report? Contact us at blackchina@az-china.com to find out more about becoming a subscriber.
SHANXI, Sep 26, 2008 (SinoCast via COMTEX) — Himadri Chemical & Industries Ltd., the largest coal tar processing group in India, inked a cooperation agreement recently to set up a joint venture in Xiaoyi, Shanxi Province in China.
The Indian company will invest CNY 100 million in an existing Chinese company. The deal is waiting for the examination of the commerce department of Shanxi. The venture is said to be able to process 30 million tons of coal tar per year. The deal is estimated to be completed within one month.
Green coke
Last week the domestic Green coke market price continued to weaken. The inventory level of moderate sulphur green coke conitnued to rise, so suppliers had no choice but to lower the price. Prices dropped between 140-250RMB/Ton, a much bigger drop than previous weeks. High sulphur green coke price dropped 50-270 RMB/Ton last week.
The market price of Low sulphur green coke kept stable last week ,but only because some Dongbei refineries had previously lowered the price and sold most of their stock.
Calcined coke
The price of Low sulphur calcined coke didn`t change, remaining at 4700-5000RMB/Ton. Moderate Sulphur coke price started to fall, dropping 100-200RMB/Ton last week. High sulphur calcined coke didn`t change.
Anode
Anode prices dropped another 50-300RMB/Ton last week. due to the falling green coke price and demand decreasing.
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