Starting from March 11, as the environmental impact of the heating season draws to a close and the Winter Olympics and Winter Paralympics gradually come to an end, carbon enterprises that had previously suspended or reduced production are gradually resuming normal operations, and demand-side support for the market continues to strengthen. However, due to the recent resurgence of COVID-19 outbreaks in many regions, logistics and transportation have been disrupted, restricting shipments from some refineries, thereby further exacerbating the tight supply situation in the petroleum coke market.

Medium-sulfur calcination Jiao Price Trend Chart

In March, the operating rates of domestic calcination enterprises continued to rise. As of mid-March, the operating rate of commercial calcination enterprises remained steady at 42-45%. Recently, carbon enterprises in Jiangsu and Henan provinces have seen a noticeable increase in their operational activity. However, calcination enterprises in Shandong and Hebei provinces have been facing challenges due to the pandemic, with difficulties in procuring raw materials and exporting finished products, resulting in production resumption and capacity expansion plans falling short of expectations.

Recently, the carbon market for aluminum applications has shown robust trading activity. Among general-grade products, the price of medium-sulfur calcined coke has risen to 4,750 yuan per ton, an increase of 750 yuan per ton, or 18.75%, compared to February. Year-on-year, the price has surged by 2,350 yuan per ton, representing a growth rate of 97.92%. Medium-sulfur calcined coke with superior trace-element content, supported by rising costs, saw its transaction prices climb to 5,550 yuan per ton as of mid-March, marking a month-on-month increase of 8.82% and a year-on-year rise of 3,000 yuan per ton, or 117.65%.

Trend chart of domestic electrolytic aluminum prices

Since 2022, the domestic electrolytic aluminum market has seen relatively active trading. Spot transaction prices for electrolytic aluminum have remained volatile within the range of 21,000 to 23,000 yuan per ton. Although cost prices continue to rise, electrolytic aluminum companies’ theoretical profits remain at high levels.

As we entered 2022, with the recovery of coal supply for power generation and the relaxation of dual-control policies, electrolytic aluminum enterprises gradually began resuming production. Meanwhile, Yunnan Province overfulfilled its water-storage targets, providing a solid water resource guarantee for industrial production during spring and summer 2022 and offering strong hydropower support for the resumption of operations at electrolytic aluminum plants. On the other hand, the China Southern Power Grid Company conducted multiple in-depth surveys of aluminum enterprises, systematically releasing electricity load to support the safe and orderly resumption of production and operation at electrolytic aluminum plants in its affiliated regions. With the concerted support of various government departments and the China Southern Power Grid, the total capacity of electrolytic aluminum plants that resumed production in February reached 510,000 tons per year.

As of the end of February, China’s installed capacity for primary aluminum smelting reached 43.49 million tons per year, up 0.25% month-on-month and 1.92% year-on-year. The operating capacity stood at 38.809 million tons, an increase of 60,000 tons per year compared to January, representing a month-on-month rise of 0.15% but a year-on-year decline of 1.68%. In February, China’s primary aluminum smelting utilization rate was 89.24%, up 0.84 percentage points from the previous month but down 3.32 percentage points year-on-year.

2022 New Production Capacity Commissioning Table for Primary Aluminum Smelters

Unit: 10,000 tons/year

In 2022, China’s newly added electrolytic aluminum capacity totaled 1.748 million tons, with most of the new capacity coming online in the second half of 2022. The newly added capacity was concentrated in regions such as Yunnan, Inner Mongolia, Guangxi, and Guizhou. The release of this new electrolytic aluminum capacity provided effective support to the carbon market for aluminum applications.

Recently, due to frequent outbreaks of COVID-19 in various regions, domestic petroleum coke shipments have come under pressure. Some refineries have been forced to clear their inventories at low prices, resulting in a noticeable decline in petroleum coke prices. However, as the epidemic is brought under effective control and downstream market demand recovers, there is potential for petroleum coke prices to continue rising in the future.