China's Coker Shutdown Squeezes High-Sulphur Anode Coke Supply

Motiva

In a significant development within the petroleum coke industry, Zhejiang Petrochemical, a major independent refiner in China, recently halted operations at its delayed coker unit (DCU) on September 19. The shutdown of this facility, which produces high-sulfur, anode-grade petroleum coke, has caused a tightening in the supply of this crucial material. Prior to the shutdown, the unit was churning out approximately 70,000 tons per month of coke with a 6.5% sulfur content and 350ppm vanadium, critical for the anode-grade calcining market.

This unexpected supply disruption is expected to drive demand for alternative sources of high-sulfur anode-grade cokes, with refiners from other regions stepping in to fill the gap. U.S. Gulf refiner Motiva, with its Port Arthur refinery in Texas, may see increased interest in its high-sulfur DCU 1 coke, as well as Saudi Arabia's sponge-grade coke, both of which have similar specifications and production capacities.

Impact on Global Supply and Prices

In addition, Japanese refiner Cosmo Oil's Sakai refinery, which produces approximately 500,000 tons of coke per year with around 7% sulfur and less than 300ppm vanadium, is also expected to be in higher demand. Historically, the Sakai refinery has directed the majority of its production toward its domestic power plant, Yokkaichi Kasumi, but recent plant maintenance has opened the door for increased exports. In fact, Cosmo Oil has been offering this high-sulfur coke to Chinese buyers at a competitive rate of 1,350 yuan per ton ($192 per ton), a significant premium compared to domestic fuel-grade coke prices.

China's coker shutdown has prompted a rise in imports of Japanese coke, with trade data showing imports of 11,000 tons in July and 21,800 tons in August. These figures mark the first time China has imported coke from Japan since November 2023, further highlighting the tightening supply situation in the region.

This development will likely continue to influence global anode-grade petroleum coke prices, driving up demand for both U.S. and Japanese refiners, as China looks to compensate for its lost domestic production.