Loosening restriction on Metal Plants in China: What impact will it have on Petroleum coke prices

China has relaxed few of the restrictions on refineries which were imposed to manage and reduce the carbon emissions impact on the environment and stabilize their economy. The reason being global trade routes and the supply of major feedstock like crude oil and natural gas that have been disrupted due to the ongoing war in the eastern European region. Since the emission limits are lifted in the current scenario, the demand for feedstock like Petroleum coke has been increasing which previously wasn’t widely used as feedstock in various industries owing to its high Sulphur content.

External factors like the Russia-Ukraine war drove up the prices of upstream crude oil and natural gas quite high and restricted production from February 2022 owing to the Winter Olympics, followed by the enactment of strict lockdowns to counter the resurgence of covid 19 cases in March 2022, which have all contributed to the reduction in steel output by 3% in March on a year-on-year basis.    

The downstream Chinese steel plants are ramping up their production to boost up the country’s economy and meet the needs of the domestic market. Many suppliers have been receiving orders from Europe due to supply disruption on  account of the ongoing conflict between Russia-Ukraine. According to our sources, the Chinese government is boosting its production to fulfil the country’s domestic demand and not to meet the foreign demands, and thus, exports are likely to be restricted in a bid to increase the country’s infrastructure capacity. Despite weakening upstream coal price, the demand for petroleum coke in China, especially from Steel plants, is sufficient to increase the Petroleum coke price in the Chinese market.

According to Chemanalyst, the prices of Petroleum Coke in China are likely to rise as the emission levels are now more flexible, which could drive the demand for petroleum coke higher. Only stricter emission norms against metal plants may stabilize the price trend of Petroleum Coke in China.