Needle Coke Industry Development Status

(1) Influenced by downstream demand, market scale grows rapidly, prices fluctuate wildly

At the beginning of its appearance, needle coke was mainly used in graphite electrode industry. Since 2016, China's steel prices have rebounded from the bottom. In 2017, China introduced a steel industry capacity reduction policy, banning strip steel production. Electric arc furnace steelmaking has become the future development trend. The rapid development of graphite electrode market has greatly promoted the demand for needle coke and caused the rapid rise of needle coke market. In 2017-2018, demand for needle coke in China exceeded supply. Due to the rapid development of graphite electrodes on the demand side and production restrictions on the supply side caused by environmental reasons, China's needle coke market price has increased from 6000-8000 yuan/ton to around 40,000 yuan/ton.

In 2019, China's needle coke price entered the downward channel. The main reason is that the increase in the supply capacity of graphite electrodes has led to a sharp drop in price; In 2020, affected by the COVID-19 epidemic and other factors, the downstream demand was relatively weak, and China's needle coke market price fell sharply.

Since the second half of 2020, China's new energy vehicles output has shown a rapid growth trend, and the demand of the power battery anode material industry has grown rapidly, becoming a new growth point in the needle coke application field. In additionfrom 2021 to 2022, with the gradual release of electric arc furnace steelmaking capacity, energy transformation and the proposal of the policy of "carbon peak carbon neutrality", all these make the price of needle coke rise. Although needle coke price fluctuates greatly, the overall market scale shows an upward trend.

(2) The capacity expands rapidly, while the effective capacity is insufficient

In recent years, China's needle coke production capacity has expanded rapidly. In 2016, the global needle coke production capacity was 1.07 million tons/year, of which needle coke production capacity was 350000 tons/year, accounting for 32.71% of the global production capacity, and there were only 5 Chinese needle coke manufacturers. Since 2018, the investment and construction of China's needle coke have accelerated. By 2021, needle coke global production capacity has increased to 3.36 million tons/year, among which China's production capacity has increased to 2.29 million tons/year, accounting for 68.15% of the global production capacity. China's needle coke manufacturers have increased to 22. Compared with 2016, China's needle coke manufacturers total production capacity increased by 554.29% in 2021, while the foreign manufacturers' production capacity was relatively stable.

Although China's needle coke production capacity is growing rapidly, the effective capacity is insufficient. On the one hand, most manufacturers newly entering needle coke industry lack production technology and experience accumulation, and some of the production capacity still has problems such as poor product quality, unstable product quality, and substandard environmental protection treatment. Therefore, it is difficult to produce high-quality needle coke that meets the production requirements of large specifications and ultra-high power graphite electrodes and lithium battery anode materials, and the competition between middle and low-end products is fierce, and even some equipment is idle as soon as it is put into production; On the other hand, in recent years, coal tar pitch price has been at a high level, the coal based needle coke production cost has risen, and some coal based needle coke manufacturers have reduced or stopped production, with insufficient operating rate and low capacity utilization.

(3) With the continuous improvement of needle coke technology in China, the proportion of  import volume gradually decreases

The production technology of needle coke originated from abroad. In the 1960s, the United States took the lead in developing the production technology of petroleum based needle coke, realizing industrial production. In the 1970s, Japan successfully developed the technology of coal metering needle coke, realized industrial production, and made petroleum based needle coke and coal based needle coke coexist in the market. The main manufacturers of petroleum based needle coke are Philip 66 of the United States and Shuidao of Japan, while the main manufacturers of coal based needle coke are Mitsubishi of Japan and Nippon Steel of Japan.

The research of China's needle coke began in the late 1970s, and until 1995, the production unit of petroleum based needle coke with an annual output of 20000 tons in PetroChina Jinzhou Petrochemical Company was put into operation, which opened the prelude to the industrial production of petroleum based needle coke in China; In 1998, Coastal Chemical Industry (Anshan) Co., Ltd. established the production plant of 20,000 tons/year coal based needle coke, realizing the industrial production of coal based needle coke in China.

Historically, China's production of needle coke, especially high-end needle coke, is relatively small, mainly relying on foreign imports. In terms of quality, the impurities and sulfur content of imported needle coke are lower than those of domestic needle coke; Domestic needle coke has high thermal expansion coefficient, poor strength, low specific resistance of powder, poor stability and other conditions in technology, which largely limits the substitution of domestic needle coke for imported products.In recent years, as China attaches great importance to "carbon peak and carbon neutrality", the market demand for needle coke has increased substantially. The leading needle coke industry has increased research and development investment, and China's needle coke technology has been continuously improved and made breakthroughs, and the product quality has been continuously improved, and even exported to the United States, Europe, Russia, India and other countries and regions. The situation that high-end needle coke relies heavily on foreign countries is gradually reversed, and the proportion of imports is decreasing.

(4) There is still a gap between the quality stability of needle coke in China and that abroad

In recent years, the capacity scale and technical level of China's needle coke have developed rapidly, and the product quality of most manufacturers can meet the market demand, while the proportion of imports has gradually decreased. However, product quality stability needs to be improved due to factors such as scattered raw material sources and late industrial start, which still lags behind the advanced level abroad.

Foreign large needle coke enterprises usually conduct business directly with large single suppliers. The raw material index is relatively stable, and the needle coke product quality is high. However, most manufacturers in China have scattered sources of raw materials and uneven quality. Higher technology is needed to process raw materials to improve the stability of raw materials quality entering the production unit.

In addition, compared with foreign needle coke industry, China's needle coke industry started late, the level of core technology still needs to be improved, advanced talents are scarce, and the experience of refined management and quality management in the production process still needs to be accumulated. However, the newly launched needle coke enterprises' evaluation cycle in the downstream application industry is long, which hinders the technological upgrading speed to a certain extent. For more information about carbon market before the Spring Festival, feel free to consult us.