The Market of Petroleum Coke in China Remains Stable Ahead of the Lunar New Year

The recent turbulence in China's Petroleum Coke market has finally settled into a state of cautious stability, driven by a delicate equilibrium between supply and demand. While the industry witnessed a significant price plunge earlier, several factors are contributing to the current subdued but stable pricing of Petroleum Coke at the beginning of February itself amidst the Lunar Year.

The Chinese market for Petroleum Coke saw unchanged pricing dynamics to settle at USD 240/MT Petroleum Coke (Calcined) Ex-Shanghai in the week ending 16th February 2024. The stability was attributed to the current market sentiments as several Chinese traders were hesitant to make new deals before the Lunar New Year holiday. The market for Petroleum Coke has been impacted by the weakness in the freight rates because there has been a decline in new orders due to weak downstream industry demand. Due to their inventory management, Chinese firms were holding onto significant stockpiles, limiting aggressive sales and stabilizing prices of Petroleum coke during the H1 of February 2024. Moreover, several refineries haven't been operating at full capacity, keeping supply-side inventory manageable.

Downstream Stockpiling was the major supporter of the firmness in the Petroleum coke market as the pre-holiday stocking by downstream users ensured low spot prices and reduced immediate demand pressure. Additionally, weakening logistics transportation further dampened market activity. Downstream enterprises were winding down operations for the Spring Festival due to the holiday shutdown, further reducing procurement activity. This inactivity puts pressure on refineries to move their existing stocks, keeping enthusiasm for new sales in check. However, as per the data, the Manufacturing Purchasing Managers' Index (PMI) of the National Bureau of Statistics increased to 49.2 in January from 49.0 in December. The factory activity shrank for the fourth consecutive month due to deflationary pressures and poor demand for downstream construction in the regional as well as overseas markets.

As per ChemAnalyst, the market of Petroleum coke in China is expected to showcase an uptrend in the upcoming weeks as the weather in China has changed from a week earlier, with colder temperatures expected in the northeastern and eastern regions over the next 10 days. This could increase demand for winter heating, leading to higher coal consumption by power plants and high demand for Petroleum Coke. In addition, restocking efforts ahead of the Spring Festival could further reduce stockpiles of high-sulphur fuel-grade Petroleum Coke at Chinese ports is foreseen to reverse the current trend. The future trajectory of prices will depend on the recovery of downstream sectors, the easing of environmental regulations, and the overall economic climate.