Petroleum Coke Demand Forecast to Rise by 4%py Through to 2016

LONDON, October 2, 2012 /PRNewswire/ --

The dynamics of petroleum coke supply are changing according to a new report from Roskill.  New coking capacity and the heavier grades of crude oil being processed are increasing petroleum coke production levels.  Consumption is still largely linked to competitive pricing levels, particularly for the bulk markets as a fuel where it competes with low value steam coal and shale gas.

Political decisions in both North and South America are affecting US supplies of the very heavy crudes that best suit petroleum coke production.  In the North, on 27 September 2012, Canadian landowners, tribal leaders and environmentalists sent an open letter to President Obama and Governor Romney asking them to withdraw their support for Keystone XL pipeline.  Keystone XL would be the first crude oil pipeline to bring heavy syncrude from Canada to the US Gulf Coast.  President Obama rejected a Keystone XL permit application in January 2012 due to concerns about the impact construction activity and potential pipeline spills would have on the Ogallala Aquifer in Nebraska. A new permit decision is expected in early 2013.

In South America, Venezuela's crude oil production continues to decline.  In 2012, Venezuelan oil production is estimated to have totalled less than 2.25M barrels/day, compared with 3.18M barrels/day in 1997.  Twelve US Gulf Coast oil refineries produce petroleum coke from heavy imported Venezuelan crude oil in 2012.  There is no major alternative source of such heavy crude for these refineries, other than the Canadian syncrude that might have arrived via Keystone XL. The latest report from Roskill details how the USA is still the world's largest producer of petroleum coke from heavy crude oil, accounting for 40% of supply in 2011, but that production in China and India has grown and now accounts for nearly a quarter of global output.  By 2016 Roskill forecasts that these two countries could contribute one third of world supply, which is expected to reach 170Mt.

Seven major new coking plants are expected on line worldwide between 2012 and 2016.  This is changing the focus of the industry from North America to Asia.  Since the global economic recession, China has emerged as a new centre for petroleum coke production, with output of 24Mt in 2011, up 10% over the previous year.  However, these capacity expansions might not address the impending shortages of anode grade petroleum coke that are quantified in this latest Roskill report.

Asian buyers, in particular, have taken advantage of cheaper freight rates and low petroleum coke prices to use petroleum coke as a cheaper source of fuel than coal.  Buyers for power generation, cement and industrial uses bought US and Venezuelan petroleum coke, bidding whenever prices for delivery to Asia were competitive.  The first half of 2012 and the whole of 2011 realised record exports of uncalcined fuel grade petroleum coke from the USA, which was bolstered by overproduction in North America.  Prior to 2008, nearly all the petroleum coke shipped from the US Gulf and Venezuela was shipped to buyers in the Atlantic Basin, mainly to cement companies.

Petroleum coke consumption is expected to rise in line with production levels as oil refiners are committed to make sure their by-product finds a market.  Petroleum coke is one of several low value solid by-products of the oil refining industry and this is reflected in its pricing. Decisions about production levels are not made based on the markets for petroleum coke, as it is a waste product it is "priced to move" rather than store.

The total petroleum coke market is relatively small at 100Mtpy and worth some US$5-6Bn.  It is caught between the demands of five other giant industries - oil refining, electricity generation, cement, steel and aluminium.  

Oil refineries aim to produce higher sulphur petroleum coke, which then enables them to use the coking process to dispose of problem waste refinery streams.  Crude steel and aluminium industries require higher purity, low sulphur, low metal cokes for the production of high quality electrodes.  Fuel grade sponge and shot petroleum coke is used as an energy source in cement plants and electricity generation, and provide a useful alternative to coal for these energy users.  This is as long as the delivered price on a per BTU (British thermal unit) basis is lower than coal.

Fuel grade high sulphur petroleum coke is the largest market, accounting for over 75Mtpy.  Between 2011 and 2016, Roskill forecasts that this market will grow by 4%py.  The highest growth rates will be seen for anode grade coke used in aluminium and other smelters, with an average annual growth rate of 6% over the same time period.  Overall, Roskill forecasts that the petroleum coke market will increase by 4%py until 2016, slightly lower than the 6%py growth rate seen between 2006 and 2011.

Petroleum coke: Global industry markets and outlook, 6th Edition, 2012 is available at £3500 / US$5800 / €4600 from Roskill Information Services Ltd, 54 Russell Road, London SW19 1QL ENGLAND. Tel: +44 20 8417 0087. Fax +44 20 8417 1308 Email: info@roskill.co.uk   Web: http://www.roskill.com/petroleum-coke

Note to editors

The report contains 244 pages, 131 tables and 63 figures.  It provides a detailed review of the industry, with subsections on the activities of the leading producing companies. It also analyses consumption, trade and prices.

For further information on this report, please contact Kerry Satterthwaite, Kerry@roskill.co.uk or +44-20-8417-0087.

SOURCE Roskill Information Services