SunSirs: Analysis of 2023 China Petroleum Coke Market and Prediction for 2024

According to the commodity market analysis system of SunSirs, the price of refined petroleum coke in 2023 will first rise and then fall, and the price will continue to be low. On January 1st, the mainstream market price of refined petroleum coke was 2,689 RMB/ton, while as of December 31st, the mainstream market price was around 1,720 RMB/ton, with an annual decline of 36.04%; Among them, the highest price for the year 2023 was around 3,451.50 RMB/ton on February 1st, and the lowest price was 1,626.50 RMB/ton on March 31st, with a maximum annual amplitude of 52.88%.

In January, the price of refined petroleum coke increased significantly, with low inventory levels in refined enterprises. Downstream enterprises stocked up before holidays, refineries shipped actively, and transactions were good. The price of petroleum coke continued to rise. During February and March, the price of refined petroleum coke plummeted sharply, and the storage of petroleum coke in domestic ports was at a high level. Port traders actively sold imported petroleum coke to recover funds. In addition, imported petroleum coke gradually entered the port for storage, making it difficult to change the trend of high storage of petroleum coke in ports. The operating rate of delayed coking units in China remains high, with sufficient market supply. Local refining enterprises are actively reducing prices and discharging inventory, resulting in poor trading and investment. Currently, the petroleum coke market is in a situation of oversupply. With the high inventory of imported petroleum coke, the domestic petroleum coke supply is sufficient, and the overall supply of the domestic petroleum coke market is abundant. From April to the end of the year, the overall domestic petroleum coke is in a narrow range of fluctuations, with a price range of 1,700-2,000 RMB/ton.

In terms of cost, constrained by the ever-changing international situation and expectations of declining demand, the crude oil market in 2023 has also experienced ups and downs. Within the year, WTI crude oil prices fell by 8.46%, while Brent crude oil prices fell by 7.56%. The global crude oil supply will continue to shrink in 2024, mainly due to the OPEC+ policy of reducing crude oil production continuing until the end of 2024. In terms of demand, there is room for a sustained increase in global crude oil demand in 2024, mainly due to the stable recovery of the Asian economic situation. However, inflation rates in Europe and America are still high, so the international economic situation is still not optimistic. Therefore, it is expected that the average oil price in 2024 may be slightly higher than in 2023, but the increase will not be too significant.

Supply side:

China's delayed coking unit processing capacity

In 2023, the production capacity of delayed coking units in China was 149.15 million tons, an increase of 2.05% year-on-year. In terms of the distribution of petroleum coke production capacity in 2023, the delayed coking unit capacity of independent refineries continues to occupy the first place, while Sinopec's production capacity ranks second. Among them, Shandong's regional production capacity accounts for 36%, ranking first among all provinces. At present, the expected new capacity of domestic delayed coking units: the 3 million t/a delayed coking unit of Guangdong Petrochemical Refining and Chemical Integration Phase II will be put into production in 2024, and the 1.5 million t/a delayed coking unit in Karamay, 1.6 million t/a delayed coking unit in Zhongke Refining and Chemical, and 1.6 million t/a delayed coking unit in Daxie, Ningbo will be put into production or completed in 2025.

The overall production of domestic petroleum coke market is increasing year by year. According to data from the National Bureau of Statistics, the domestic petroleum coke production in 2023 was about 33.426 million tons, an increase of 11.3% year-on-year. In 2023, there are fewer domestic refining and maintenance equipment, and the domestic petroleum coke production supply is abundant. In 2024, domestic refineries may undergo centralized maintenance, and the delayed coking unit maintenance in domestic refineries may have a significant impact on production compared to 2023.

According to customs data, the import volume of unburned petroleum coke in China reached 16.02 million tons in 2023, an increase of 8% year-on-year. In the first half of the year, this was mainly due to the continuous decline in domestic market prices, severe cost inversion of imported petroleum coke, strong reluctance of import traders to sell, and relatively low flow of imported coke on site; After entering the second half of the year, as the cost of importing petroleum coke to port gradually decreases, coupled with the gradual improvement of downstream demand, import traders continue to ship.

In terms of exports, petroleum coke is mainly driven by domestic demand, and the proportion of export demand to China's total petroleum coke demand is extremely low, maintaining below 1% year-round. The main reason is that with the rapid development of domestic new energy, the demand and trade flow of petroleum coke has shifted more towards domestic sales, so China's petroleum coke export volume has always remained relatively low.

The port inventory of petroleum coke continues to accumulate in 2023, continuously creating new historical highs. As of December, the total inventory of petroleum coke in ports was 4.674 million tons, an increase of 2.183 million tons or 87.64% year-on-year. At the beginning of 2023, there were about 2.5 million tons of imported petroleum coke in major ports in China. In the first half of the year, a large amount of imported petroleum coke continued to arrive at ports, and port inventories rose to over 5.5 million tons. The overall shipment of imported petroleum coke in the third quarter was poor, and port inventories remained above 4.3 million tons. In the fourth quarter, due to the inverted cost of imported petroleum coke and the reluctance of traders to sell, port spot inventory rose to around 4.6 million tons.

Demand side:

Apparent consumption of petroleum coke in China

The total consumption of petroleum coke in China in 2023 was 44.2 million tons, a year-on-year increase of 8.03%. Among them, the demand for petroleum coke in the pre baked anode field still maintains a good growth momentum, accounting for 59% of the entire consumption structure.

Downstream of petroleum coke - electrolytic aluminum

In China, in the downstream demand industry for petroleum coke, the proportion of electrolytic aluminum ranks first, and the electrolytic aluminum market is the driving force determining the upward trend of petroleum coke. China is the world's largest producer and consumer of electrolytic aluminum, with continuous growth in domestic electrolytic aluminum production in recent years.

The annual average social inventory of aluminum ingots in 2023 is 690,000 tons, far lower than the average annual inventory since 2017. At present, there is a significant reduction in inventory. As of January 15, 2024, the inventory of electrolytic aluminum in China's main market is 435,000 tons, which is at a historical absolute low.

1. The total production capacity of electrolytic aluminum is close to the production capacity ceiling, and the growth of production capacity in 2024 is limited. In 2023, China's electrolytic aluminum production capacity was approximately 44.7 million tons, with a production capacity of 41.4 million tons, a year-on-year increase of 3.5%.

2. Domestic new production will be concentrated in the second half of the year. The probability of domestic aluminum supply decreasing first and then increasing in 2024 is high.

Prediction of petroleum coke market in 2024

In terms of supply, the overall supply of China's petroleum coke market is abundant in 2024. There will still be new production capacity in the domestic petroleum coke market in 2024; In 2024, delayed coking units in domestic refineries may undergo centralized maintenance, and the domestic petroleum coke production in 2024 may be lower than in 2023; The high level of petroleum coke storage in ports in 2024 is currently difficult to alleviate. In terms of demand: With the development of China's new energy market, the demand for petroleum coke in downstream markets such as electrolytic aluminum continues to increase; The country has issued policies to support the development of the energy storage market, and some refineries are trial producing "energy storage specific coke" for use by negative electrode enterprises, supporting the petroleum coke market. Overall, in 2024, the domestic market price of medium sulfur petroleum coke may continue to fluctuate, with the highest point expected to occur in the first half of the year, expected to be around 2,200 RMB/ton; The low point of the 2024 market is expected to occur in the second half of the year, with the low point expected to be around 1,600 RMB/ton.

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