Outlook to China’s heating season 2020-21 impact on prebaked anode industry

The Shanghai Metals Market has analysed the impact of the upcoming heating season on China’s prebaked anode industry, based on the relevant policies and specific measures in 2+26 cities. 2020 is the last year of China’s three-year action plan to fight air pollution, and many regions in northern China is about to enter the heating season of 2020-21.

At the end of June 2020, the general office of the Ministry of Ecology and Environment of China issued a technical guide for key industries to reduce emissions in heavily polluted weather, stipulating specific emission reduction measures for enterprises with different grades in key sectors.

Currently, there are 49 prebaked anode producers operating in Beijing-Tianjin-Hebei and its adjoining areas and the Fenwei Plain, with a total equipment capacity of 11.72 million tonnes and operating capacity of 9.3 million tonnes. The former accounts for about 41.8 per cent of the total built equipment capacity in China, while the latter for 45.3 per cent of total operating capacity.

This year, SMM expects the environmental policy to have a significant impact on the prebaked anode supply in winter. Given below are the effects of policy in different provinces.

Shandong province: In Shandong, winter heating-season production restrictions would cause an output cut of prebaked anode by about 1.44 million tonnes to 2.02 million tonnes this year. 27 producers are involved in manufacturing prebaked anode in Shandong with a total capacity of 7.56 million tonnes.

Henan province: According to the policy issued by the Henan government, total capacity of prebaked anode makers, including A and B grades, stands at 1.37 million tonnes. Henan Zhonfu, Luoyang Wanji, and Luoyang Longquan Tiansong’s prebaked anode plants are categorized as grade B. The Henan government will strive to eliminate the 18 independent prebaked anode producers whose annual capacities stand below 100,000 tonnes before the end of 2020 by comprehensively using economic and legal means, SMM learned.

Other regions: Production restrictions during the heating season this year are also expected to have an impact on prebaked anode output in Hebei, as operating rates at local producers have been low due to a strict control of air pollution for long.

To conclude, producers in Shandong are now managing to operate at full capacity in order to make preparations for orders in the heating season. High costs of raw materials and production restrictions in the north led to a steep fall in prebaked anode supply.