【Needle coke】In the first quarter, needle coke demand remained flat and may rebound later

1. The needle coke market is expected to have a turning point in the later stage 

The first quarter of 2023 has ended. Since the beginning of the year, needle coke price has been falling and demand has remained flat. The operating rate of petroleum based needle coke enterprises was flat, while that of coal based needle coke enterprises was relatively low. In terms of raw materials, the price of coal tar pitch has significantly decreased compared to the beginning of the year, and the cost of coal based needle coke has increased, but due to sluggish demand and other reasons, the cost increase is limited; The international oil price rose to a narrow rise in the price of petroleum slurry, providing strong support for the cost of petroleum based needle coke. In general, the needle coke market was slightly weak in the first quarter, and since 2023 the cancellation of the new energy vehicle purchase tax subsidy policy has to some extent affected the demand for new energy vehicles. Both supply and demand in the negative electrode market were sluggish, and graphite electrode trading atmosphere was flat. However, China is still actively supporting "carbon neutral". The overall demand has been formed, and the late stage market still exists.

2. Needle coke price has decreased, and large capacity improvement space for coal based needle coke

According to data statistics, as of March 15th, the price of coal based raw coke was 7700 yuan/ton, while the petroleum based raw coke was 7900 yuan/ton, down 800 yuan/ton from the beginning of the year; The price of coal based calcined coke was 10000 yuan/ton, while the petroleum based calcined coke was 11000 yuan/ton, a decrease of 1500 yuan/ton compared to the beginning of the year. The market demand for downstream graphite electrode and negative electrode materials is flat, directly affecting the demand for needle coke; In addition to the continuous decline of petroleum coke price, the cost support has weakened, which are all the reasons for the price decline of needle coke.

In February, China's total domestic needle coke output was 83900 tons, including 76600 tons of petroleum needle coke and 73000 tons of coal needle coke, down 13.77% month-on-month; The operating rate in February was 44%, down 5% month-on-month.

Coal based needle coke market has been in a state of watching since the Spring Festival; The local market was mainly dominated by petroleum based needle coke. The production capacity of petroleum based needle coke enterprises was relatively stable, and the overall inventory was at a relatively high level, bringing greater pressure on exports.

In February, some enterprises shut down to maintain prices and have now started production. The overall market purchases according to demand, with most people seeking to purchase low-cost raw materials. The high-priced needle coke covered a narrow market.

Since the beginning of the year, petroleum slurry price has maintained a slight upward trend. Up to now, the price of high sulfur petroleum slurry is 4400 yuan/ton, up 300 yuan/ton; the medium sulfur petroleum slurry was 4675 yuan/ton, up 95 yuan/ton; the low sulfur petroleum slurry was 5050 yuan/ton, up 280 yuan/ton.

International oil prices have risen, and the price and cost of petroleum mud have been strongly supported. In March, some small refineries showed signs of production, Shandong's local fuel petroleum commodity volume may significantly decline. The cost of petroleum needle coke is relatively high, and there is still a large market. In the long run, demand is still there.

Coal tar pitch prices since the beginning of the year continued to fall, with a significant margin. Up to now, the price of modified pitch in Shandong is 5900 yuan/ton, down 1850 yuan/ton; The price of medium coal tar pitch in Northeast China is 6500 yuan/ton, down 1200 yuan/ton.

In March, China's domestic pitch total designed output was 2.762 million tons, with a month-on-month increase of 55.17% and a year-on-year increase of 47.06%. The utilization rate of unit capacity was 28.4%, a year-on-year increase of 2.8%. Inventory has decreased, but the overall inventory level in the coal tar pitch market remains high, which has brought great pressure on manufacturers' supply and transportation.

3. Needle coke market review from 2020 to 2022

In the context of the continuously rising market situation of raw material prices in 2020, the cost pressure on needle coke will further increase, the production enthusiasm of enterprises will decline, the production of new units will be delayed. Recently, graphite electrode market price has risen, which has a positive impact on needle coke market. The raw material market price continues to be strong, and needle coke price will also rise accordingly.

In 2021, oil price rose, leading to some petroleum coke price also rising, which also contributed to a rebound in the price of needle coke. Due to the impact of overseas epidemic and related enterprise maintenance, the port inventory of imported needle coke was low before the year, and some products were in tight supply, driving up domestic needle coke price; The rapid development of new energy vehicles has led to a substantial increase in the demand for power batteries, with needle coke accounting for more than 70% of the total cost of graphite electrodes. Ultra-high power graphite electrode raw materials are all needle coke, its price continues to rise.

In 2022, the petroleum based coke overall price showed a trend of first rising and then falling. From June to July, petroleum raw coke price reached the highest level in the year. After the third quarter prices continued to fall, the overall market is in the process of consolidation. On the one hand, due to the large amount of inventory in the early stage, the enterprise has sufficient inventory; The price trend of petroleum based calcined coke is arched. Due to the continuous release of new graphitization capacity, the demand for resistance materials, insulating materials, graphite plates, graphite crucibles, etc. by graphitization enterprises is increasing, which also increases the demand for petroleum based calcined coke, leading to price increases.

In the first half of 2022, coal based raw coke mainly showed a steady upward trend. In the first and second quarters, due to the price rise of coal tar pitch, the cost of coal based enterprises continued to increase, and in addition to the prevention and control of epidemic diseases in many regions in China, the shipment volume of coal based raw coke was restrained, and the freight price increased. Various factors provide cost support for coal based raw coke. At the same time, in the first half of the year, many negative enterprises expanded production or built new capacity, coal based raw coke demand continued to increase. In addition, the increase in production scheduling in the second quarter led to a tight supply of negative electrode materials, which provided demand side support for coal based raw coke. The market price continued to rise, reaching 9500 yuan/ton. Contact us for more reports of needle coke overall market demand forecast.