US anode grade petcoke prices could skyrocket and US Gulf Coast fuel grade petcoke prices would fall if China imposes a ban on "unqualified petcoke," a petcoke specialist said Thursday.
While the definition of unqualified petcoke has not been announced by the Chinese government, it is widely expected that petcoke with greater than 3% sulfur would be banned from import into the country, Stuart Ehrenreich of Anacortes, Washington-based Cascade Resources & Consulting, told a trade and transport audience at a New Orleans conference.
"What that means is that if you have an anode grade petcoke, there will be greater demand for exports," Ehrenreich said. "The problem is that the US is producing less anode grade petcoke due to changes in the crude source."
China's energy demand is critical for several commodity groups, including coal and petcoke. US calcined and non-calcined exports to China have been roughly cut in half to 3.2 million mt through November compared with 6.4 million mt through the same 11-month period in 2013, according to US Census Bureau data.
In his talk at the 34th Annual Trade & Transport Conference, Ehrenreich called the potential a "major market shifting event" for the petcoke industry, regardless of China's already weakening import stance.
One barge operator in attendance said his company has made significant change in strategy away from coal to petcoke as volumes have been maintained.
Another major USGC terminal operator has seen most of its growth in petcoke handling, while coal stockpiles have grown.
That shift in strategy could still pay off for shippers as China's export ban would not necessarily mean the petcoke would not be exported. It would just have to go somewhere else, likely at a lower price.
Ehrenreich also pointed to the impact that China's proposed ban would have on the aluminum industry.
While a Chinese import ban would stifle exports from higher sulfur production US Gulf Coast refineries, it could increase demand for some lower-sulfur producing West Coast facilities.
Platts assessed greater than 2.5% sulfur petcoke at $40-$57/mt this week, and assessed less than 2.5% sulfur petcoke at $84-$86/mt.
