Why strong carbon but soft coke?

China’s petroleum coke market unexpectedly became weak in the last couple of weeks, led by the teapots refineries.  As the chart shows, the monthly price from independent refineries started to weaken during April and May, and tumbled down at the start of June. Meanwhile prices at the big SOE refineries remained stable.The change in teapot refineries’ prices coincided with scheduled maintenance at several refineries.

Teapot refineries constantly expanded in recent years, mainly in Shandong area.  Their market share reached over 30 per cent. Teapot refineries operate slightly differently in the market.   They publish their coke price changes to the broad market immediately, whereas the SOE’s only notify their larger clients of price changes for their coke.  Because of their size in the market place recently, this lends some volatility to the market.


The chart below describes the monthly change of calcined coke and anode prices. CPC output has decreased in the three months since February, climbing slightly in May. Meanwhile, anode output also fluctuated or declined in recent months.  There is no doubt that the environmental inspections halted some production.  In fact, the stringent controls around Shandong, Hebei and Henan provinces never weakened during the first half of 2017, culminating with more restrictions for the OBOR conference recently.  And this is the essential reason to push down coke price. The relationship between coke and downstream carbon has evolved into oversupply.


We mentioned in latest weekly report, Weiqiao and Inner Mongolia Jinlian aluminium conceded another increase to the purchasing price of anode in June, and the condition of Inner Mongolia is bad. In order to obtain sufficient goods to ensure the operation, they increased by RMB300-350/t. On supply, factories in Henan and Shandong had to restart slowly but in Hebei, total output kept stable with the previous month. Current anode production cannot keep up with demand right now.

In fact, what we are seeing is a function of the different cycle times for the three products.   We think the market will become clearer as we pass through June, and the strong demand at the anode level will soon move upstream to coke.  But if you really want to understand what’s happening, contact us about subscribing to our weekly and monthly reports.

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