With the forecasted demand and supply dynamics of needle coke in China, it is likely that the country may face a shortage of needle coke in the upcoming year of 2019.
The supply-side reforms in China amid environmental concerns have led to the promotion of electric furnaces (EAF) for steel manufacturing. This promotion of EAFs has led to increased demand for graphite electrodes (GE) in China leading to surge in needle coke demand (a key raw material for GE) subsequently. This increase in demand of NC refers to demand improvement in both production quantity and product quality of Chinese needle coke market. Below is an overview of China’s needle coke market capacity, trade dynamics, supply and demand scenario.
China’s needle coke capacity and trade dynamics
There are 9 major players that suppliers of needle coke in China with a total capacity of 540,000 tonnes at present.
| Company | Type | Capacity (in tonnes) |
| Yida Materials | Petroleum | 50,000 |
| Jing Yang Technology | Petroleum | 50,000 |
| Jinzhou Petrochemical | Petroleum | 40,000 |
| Baosteel | Coal | 50,000 |
| Anshan Kaifeng | Coal | 40,000 |
| Hongte Chemcial | Coal | 150,000 |
| Fangda C-chem | Coal | 60,000 |
| Baotaliong | Coal | 50,000 |
| Jinzhou Chemical | Coal | 50,000 |
| Total | 540,000 |
Source: IC Carbon
According to IC Carbon’s data, China needle coke capacity in 2017 was 540,000 tonnes which has remained the same in 2018 as no new capacities have been unleashed this year although many needle coke projects have been launched.
Source: IC Carbon
In 2019 the same is expected to increase to 830,000 tonnes whereas by 2020 it will reach 1.4 MnT by 2020. This means that China is set to add 860,000 tonnes of needle coke capacity in time period of two years with Liaoning, Henan and Shandong provinces having the highest growth in new capacities.
Source: IC Carbon
As per IC Carbon, China’s NC output is expected to be around 295,000 tonnes in 2018 and 618,000 tonnes in 2019. Out of this 618,000 tonnes about 558,000 tonnes will be supplied to the domestic market and about 60,000 tonnes is likely to be exported. The country is estimated to import about 170,000 tonnes of needle coke in 2019 and thus China’s total NC supply in 2019 is estimated to be around 728,000 tonnes.
China has to rely on imports to meet its needle coke requirements, especially over the past two years. In 2017, the country had domestic NC production of 167,000 tonnes and imports of 170,000 tonnes. In 2018 China’s domestic supplies have increased to 295,000 tonnes however its imports are likely to remain at the same level of 170,000 tonnes which means that the NC’s domestic demand has increased significantly in 2018.
China’s needle coke demand scenario in 2019
Along with GE, needle coke is used in the used lithium-anode battery and there has been increased in demand for needle coke from this segment especially over last three years.
In case of GE segment, the graphite electrode output is estimated to be around 980,000 tonnes in 2018 which will reach about 1,340,000 tonnes (1.34 MnT) in 2019 with largest growth mainly in UHP grade graphite electrode of size 500mm and above. IC Carbon has forecasted that China’s needle coke demand (conservative view) from GE segment in 2019 will reach 587,000 tonnes.
In the case of anode materials segment, China’s anode materials output is expected to reach 300,000 tonnes in 2019, requiring 230,000 tonnes of needle coke.
Thus, China’s needle coke demand from both the segments in 2019 is estimated to be around 817,000 tonnes whereas as mentioned above country’s NC supplies in 2019 is likely to be around 728,000 tonnes thus creating a short supply of 89,000 tonnes.
As the largest growth in demand comes from UHP grade FE with a diameter of 500mm and above, higher prime grade NC demand will rise accordingly and the supply-demand gap in this regard will be higher than expected.
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