Petcoke - can’t live without it

During the tough reforming period in China, petroleum coke, or petcoke has suffered much, with calcining plants being ordered to cut capacity or close completely. But if you talk about aluminum, you must acknowledge that petcoke is important now and in future.The process for making aluminum has not changed in decades, so if demand for aluminum is going to grow, petcoke demand will also grow. Let’s have a look what petcoke is going through.

As one inconspicuous by-product of crude oil, petcoke is mostly sold as a fuel, especially in times when coal prices are high. While taking into account the typical character of petcoke as a polluting material, its usage is quite limited. The illustration below explained the pressures on coke during recent years.

The important factor I want to show is the antagonistic relation between policy, economy and market demand. Last year, China imported plenty crude oil, becoming to the largest importing country around the world. Processing volumes also increased 3% y/y. However, the quality declined apparently. Although petcoke production has risen so far this year, anode grade output has not, and this is directly because of the crude oils that China is importing. Unlike other commodities, users of petcoke have almost no influence on the quality that comes out of the oil refinery. How can users influence the quality of the product offered to them? In addition, with aluminum expanding, how do smelters get enough petcoke, even regardless of the quality?

This chart above showed monthly coke production for five years. For January of 2017, output is at historical high levels, however, downstream carbon factories always complained the lack of moderate coke even though they are suffering intermittent shut down with the severe pressure of environmental inspection. So where is the petcoke going?

If you are our subscriber of BCR report, you should be familiar with the following picture.

Based on IAI statistics, China’s production of aluminum reached 2,950kt in February. In theory, anode grade coke demand is therefore 1.6Mt, an increase of 19% y/y. Actual output of coke rose by only 3%. Ignore all factors such as policy and economy, it is only about conservation of energy. If aluminium industry will boost constantly in future, we should give more attention to petcoke and all raw material.

All the data I presented here is in the standard reports we publish. If you want to understand more about petcoke and other products, please contact us.