By Shan Lianrong, Tianjin PC Transportation & Sales Center

Distribution of plants

China’s delayed coking units are basically located in northern and eastern regions, especially concentrated in Shandong Province, where the total capacity reached 54.65 million t/a in 2018, mostly belonging to teapot refineries. East China also enjoyed a huge capacity of 26.85 million t/a, mainly owned by Sinopec. The Northeast China ranked third, with a total capacity of 16 million t/a of delayed coking, mostly from PetroChina. South China and Northwest China each accounted for 9%, North China 8%, and the Yangtze River Delta and Southwest China 5% and 2% respectively.

   As of the end of 2018, China’s processing capacity of delayed coking totaled 146.65 million t/a. Among them, the teapot refineries owned 62.6 million t/a; Sinopec 52.75 million t/a; PetroChina 19.55 million t/a, accounting for 14%; and CNOOC 9.75 million t/a.

   In 2018, 6 sets of delayed coking units came on stream in China, with a total capacity of 6.6 million t/a. At present, the lines of Yunnan Petrochemical, Yuantai Petrochemical and Qirun Petrochemical have been put into production.

   From 2014 to 2018, the total output of domestic petroleum coke basically remained in the range of 24 million to 28 million tons, with a slight increasing trend. The total output in 2017 reached 27.3 million tons, reaching the record high in five years. The total petroleum coke production in 2018 was 27 million tons, down 1.07% year-on-year. As of the end of 2018, 3# petroleum coke production accounted for 42% of the total, 2# petroleum coke accounted for 29%, high sulfur coke 19%, 1# petroleum coke 6%, projectile coke and asphalt coke 2% respectively.

Limited growth in demand

   In 2017, the prices of prebaked anodes and graphite electrodes rose sharply, so the apparent consumption of petroleum coke reached 32.62 million tons, up 17.48% year-on-year. In 2018, the apparent consumption of domestic petroleum coke was still high, but the additional capacities of the steel and aluminum enterprises, derivatives of petroleum coke, have mostly been launched, and the downstream demand growth is thus limited. See Table 1 for details.

   Table 1  China’s petroleum coke apparent consumption, 2014-2018

   Among the consumers of petroleum coke in 2018, prebaked anodes accounted for 62% of the total consumption (90% for domestic use and 10% for export), fuel-grade petroleum coke 18%, export 7%, carburizer 5%, petroleum coke for silicon 5%, and the petroleum coke for the electrode 2%.

Import and export

   In 2018, China’s total import volume of coke was 9.61 million tons, a year-on-year increase of 25.74%. In the first half of 2018, China's petroleum coke imports were at a relatively high level, and the import market prices were at an upward trend. In the second half of the year, the import volume decreased significantly, and there was a huge gap between the supply and demand for the imported coke (especially medium sulfur bombs). China’s petroleum coke imports remained relatively stable in the second half of 2018.

   In 2018, China’s total export volume of petroleum coke was 2.59 million tons, an increase of 483 600 tons compared with 2017, up 22.91% YoY.

Prospect

   The raw materials available for petroleum coke is reducing with the gradual popularization of the residue hydrotreating among the domestic refineries, resulting in a decline in petroleum coke production. In particular, the petroleum cokes produced by Sinopec refineries are mostly medium to high sulfur coke, and the content of trace elements is low, which is not easy to poison the catalyst, and is suitable for the residue hydrogenation process. In the short run, domestic petroleum coke production will gradually stabilize, and market supply and demand will return to equilibrium. In the long run, as Sinopec's residue hydrotreating capacity continues to increase, its petroleum coke production will continue to decline.

   With the decline in domestic petroleum coke supply, the market is still dependent on the imported cargos. China’s petroleum coke imports will drop sharply in 2019, and then gradually recover with the increase of import channels in the next five years. Meanwhile, on the increasing demand and decreasing supply, the petroleum coke exports will decline in the next five years.

   With the deepening of China’s supply-side reforms, the steel and electrolytic aluminum industries have eliminated a large number of backward capacities. In addition, the prices of steel and electrolytic aluminum have rebounded sharply in the past two years, and the operating rates of steel mills and aluminum plants have risen largely. It is expected that the output of prebaked anode and graphite electrodes will increase steadily in the next five years. In terms of carburizers, coal-based carburizer emerges, and the consumption of petroleum coke in the field of carburizer will be reduced. In terms of fuel, the industry with high sulfur coke as fuel will continue to decrease, and the fuel-based petroleum coke will fall sharply in the next five years. In recent years, the demands for metal silicon from photovoltaic, silicone and aluminum industries are stable. It is hence expected that the demand for petroleum coke from metal silicon industry will remain stable in the next five years.