Following a brief upward spell, the prebaked anode market has pulled back again, with a major Shandong-based aluminum smelter setting its August 2026 procurement benchmark at Yuan 5,630/tonne by cash and Yuan 5,645/tonne by acceptance, down Yuan 53/tonne from July. Meanwhile, the prebaked anode production costs during the current settlement cycle are estimated at Yuan 5,615.02/tonne in Shandong, leaving an average industry profit margin of roughly Yuan 14.98/tonne.
While recent fluctuations in petroleum coke (petcoke) and coal tar pitch prices have kept overall production costs largely stable month-on-month, the renewed downtrend in anode pricing has directly eroded profitability, pushing some producers closer to loss-making territory. In the current cycle, petroleum coke accounts for 70.68% of raw material costs and coal tar pitch for 14.67%, with cost structures little changed from the prior month.
The petcoke market has shown clear divergence by grade through July, trending lower overall but with low-sulfur and high-sulfur petcoke prices mostly firming, while mid-sulfur petcoke remained under pressure. Reduced output from domestic refineries amid fresh maintenance and adjusted capacity utilization tightened supply, particularly in Northeast China where low-sulfur petcoke inventories hit multi-month lows in July, coinciding with downstream restocking to drive prices higher.
Increased outages among independent refineries also pushed sulfur content lower and boosted standard petcoke availability, prompting refineries to adjust offers based on inventory and specifications. In Shandong, 3A petroleum coke averaged Yuan 3,749.1/tonne, up Yuan 21.8/tonne month-on-month; 3B averaged Yuan 3,483.5/tonne, up Yuan 13.0/tonne; and 3C averaged Yuan 2,982.8/tonne, up Yuan 114/tonne.
In the coal tar pitch market, prices softened through July after a brief early-month rebound supported by elevated high-temperature coal tar values, which soon faded as feedstock costs retreated from mid-month onward, weakening cost-side support and dragging pitch prices lower. High downstream inventories further dampened buying interest, weighing on coal tar pitch prices. Though prices stabilized in late July as coal tar values bottomed out and buyers returned for rigid needs.
Shandong modified pitch averaged Yuan 4,845/tonne, down Yuan 93/tonne month-on-month, while Shanxi modified pitch averaged Yuan 4,780/tonne, down Yuan 160/tonne. Entering August, firm downstream demand has driven active petcoke trading and price gains, while higher auction prices for high-temperature coal tar have bolstered cost-side support for pitch, prompting deep-processing plants to hold firm on offers. Mysteel estimates show prebaked anode production costs have mildly risen by Yuan 191/tonne compared to July.
Looking ahead to late August, more refinery restarts and output adjustments are expected to lift overall supply slightly, with downstream buyers likely to maintain rigid-demand restocking. Low-sulfur petcoke is poised to remain firm, while mid-sulfur petcoke may face modest downside on ample availability. In contrast, recent coal tar auctions have trended lower, weighing on pitch prices, while high operating rates at deep-processing facilities offer little supply-side support and downstream buyers remain cautious, leaving negotiations stalemated and pointing to further near-term softness in the pitch market.
Overall, the combined effect of rising petroleum coke and coal tar pitch prices alongside weaker anode quotes has created a pronounced cost squeeze, rapidly compressing industry margins. Although raw material prices may ease slightly ahead, the adjustment is expected to be limited, suggesting cost pressures for anode producers will persist in the short term. With aluminum operating rates steady and anode orders stable, producers are leaning on needs-based procurement and tight raw material inventory management to mitigate ongoing cost volatility.
Written by Regina WANG
wangjiaqie@mysteel.com
