Chinese Petroleum coke prices expected to slide from the first week of March

Asian Petroleum Coke market could see a softening in prices by the first week of March as supply tightness will likely ease by the last week of February. Although forward prices for the last week of February show an uptrend, the futures curve is expected to end up in contango. The ongoing restrictions on emissions laid out by the government in view of the Beijing winter Olympics are expected to be lifted by the end of February. The upward cost pressure from high crude oil prices is expected to continue through to March.

“Despite persistent cost pressure, supply tightness is expected to ease up by the early to mid-March period as production levels are expected to improve when the emission norms are retracted,” one supplier form the Qingdao region opined. The average Ex-Works price of Calcined Petroleum Coke (3% Sulphur) in the Qingdao region had shot up by 6.5% in the last one month thanks to strong demand from the downstream carbon Industry. Aluminium production had picked up pace in the new year increasing the demand for baked anodes. China’s total output of pre-baked anodes had seen a slump of around 3.5% month on month in December while the average operating rates too had seen a corresponding decrease of around 4%.

Metallurgical coke demand too had seen an increase in Q1 of FY22 as steel outputs have shown an increase. The price of green coke with 3% sulphur increased by whooping 11.2% in the last one month and stands at RMB 2820/MT as of 19^th February. Prices rise will be moderate starting from the last week of February and could see stabilization by the early to mid-April period. A lot however depends on the performance of Metallurgical Coal market and its discount to petroleum coke. The prices of Metallurgical coke have posted strong declines over the last 30 days of approximately 6.5% assessed on an Ex-Works basis.