【Low Sulfur Petroleum Coke】Latest Market Trends

Although the price of low sulfur petroleum coke rebounded somewhat in August, since September, China domestic low sulfur coke refineries have started to show a trend of fluctuating decline. While the third quarter saw a decrease in the import volume of low sulfur coke compared to the previous quarter, the overall demand for downstream graphite electrodes and negative electrode materials remains weak. Despite the arrival of the traditional "Golden September and Silver October" period, the market has not yet shown signs of a peak season. A specific analysis reveals the following: 

1. Graphite Electrodes

The prices in the graphite electrode market have been supported by low sulfur coke since mid-August, with slight increases in actual transaction prices. However, some enterprises are still primarily using their previous raw material inventory. Currently, during the traditional peak season for steel demand, steel mills' procurement of graphite electrodes is driven by necessity. Since 2023, the operating rate of the graphite electrode industry has remained below 50%, and mainstream graphite electrode enterprises can generally maintain normal production. Small and medium-sized graphite electrode enterprises adopt a production-to-order approach and maintain cautious procurement of low sulfur coke.

According to statistics, in August 2023, China's graphite electrode market produced 67,800 tons, an increase of 10.78% compared to the previous month. The corresponding demand for petroleum coke was approximately 32,200 tons, an increase of 11.42% compared to the previous month. From September to December, the total production of graphite electrodes is expected to reach 270,300 tons, with a corresponding total demand for petroleum coke of approximately 127,800 tons. The reduction in demand is expected to be concentrated in the Northeast and East China regions, while the increase in demand is expected to be concentrated in North China and Southwest China. By the end of this year, the monthly production of graphite electrodes is estimated to reach 67,900 tons, with a corresponding demand for petroleum coke, which is approximately 0.81% less than that in August.

2. Negative Electrode Materials

Starting from the second quarter of 2023, China has continuously introduced a series of policies to support and encourage the development of the new energy vehicle industry. In August 2023, the production and sales of new energy vehicles reached 843,000 and 846,000 units, respectively, representing increases of 4.7% and 8.5% compared to the previous month and 22% and 27% year-on-year growth. In addition, downstream inventories have mostly returned to healthy and reasonable levels, battery manufacturers have increased their procurement efforts, and the production and sales of negative electrode materials have significantly increased compared to the previous month.

According to statistics, in August 2023, China's production of negative electrode materials reached 133,800 tons, an increase of 6.40% compared to the previous month. The corresponding demand for petroleum coke was approximately 96,300 tons, an increase of 6.40%. From September to December, the total production of negative electrode materials is expected to reach 592,100 tons, with a corresponding total demand for petroleum coke of approximately 426,300 tons. Negative electrode materials' production in various regions of China is expected to increase to varying degrees from September to December. By the end of this year, the monthly production of negative electrode materials is estimated to reach 157,600 tons, which corresponds to an increase of approximately 17.83% compared to August.

3. Price Trends

As of September 18, 2023, the price of high-quality low sulfur petroleum coke has fallen to around CNY 3,600/ton, a decrease of approximately 10.00% compared to the same period last month. The price of regular-quality low sulfur coke has fallen to 2,750-3,100 RMB/ton, a decrease of 8.33%-11.43% compared to the same period last month. In August and September, some low sulfur coke refineries in Northeast and East China resumed production, increasing market supply. Combined with the average market prices of graphite electrodes and negative electrode materials, which increased by 1.71% and -16.17% respectively in the previous quarter, the profit growth space has been consistently limited. Overall, graphite electrodes and negative electrode materials have found it challenging to provide substantial support for low sulfur coke prices.

4. Future Predictions

Graphite Electrode Demand: As the most significant downstream sector for high-quality low sulfur coke, the operating conditions of the graphite electrode industry have been relatively sluggish since the beginning of 2023. It is expected that the demand for petroleum coke in the fourth quarter will remain weak, and the traditional peak season demand is expected to be challenging to realize.

Negative Electrode Material Demand: In the second quarter of 2023, some negative electrode enterprises began trial operations for new projects, and in the fourth quarter of 2023, some negative electrode enterprises will continue to start production. China domestic production will increase month by month, to some extent, driving the market for low sulfur coke and supporting the prices of regular low sulfur coke. Follow us and stay updated on the market information of graphite electrodes.