Needle Coke Giant POSCO Chemtech Plans to Double its Production Capacity

South Korea’s needle coke manufacturer, Posco Chemtech – a joint venture of POSCO (60%) and Mitsubishi Corporation (40%) has announced its plans to add about 60,000 tonnes to its production capacity, thus bringing cheers to the GE manufacturers that are reeling under the pressure of scarce needle coke supplies.

The company’s existing capacity is already 60,000 tonnes and with this capacity enhancement, the plant’s total capacity will stand at 120,000 tonnes. While POSCO Chemical will be responsible for the production and supply of raw materials, Mitsubishi Chemical will provide technology for increasing the plant’s capacity. The capacity expansion work is expected to start in 2019.

The requirement for needle coke which is a key raw material for graphite electrodes (GE) increased significantly when the GE demand took off two years back amid supply-side structural changes in China. With no additional supplies and increased demand, needle coke prices also shot up substantially. In order to meet the GE demand amid promotion of EAFs in China, the country’s domestic manufacturers laid out extensive plans to add to their GE capacities in the next two years.

Along with this, the demand for needle coke from lithium-ion batteries segment is also surging amid explosive growth in electric vehicles (EV) demand.

Last year, POSCO Chemtech’s management had vowed to drive the steelmaker’s battery component business that supplies materials for large-sized secondary batteries used for electric vehicles. The company plans to secure 20% of the global market share of anode materials, generating 17 trillion won in annual revenue in the next 12 years. Thus in order to cater to the rising requirement from both GE from China and anode materials segment, the company has planned to double its capacity.

According to IC Carbon’s data, POSCO Chemtech exported about 56,000 tonnes of needle coke to China of which 88% of that volume was used in graphite electrodes production and 12% was purchased by Chinese producers of anode materials.

The domestic price for coal-tar pitch based needle coke in China (one of the top destinations for POSCO Chemtech’s needle coke exports) is currently trending at RMB 20,000-22,000 per tonne and that of oil-based needle coke price is at RMB 21000-24000 per tonne.