According to a new study by three consultants, AZ China, Cascade Resources and Turner Mason and Co., titled "Anode coke outlook to 2025," anode grade petroleum coke is going to play a key role in reining in the excess production of primary aluminium that has been pulling down the global aluminium prices for a while now.
Petroleum coke, also known as petcoke, is a by-product of the oil refining process; and anode-grade petcoke is that variety, which contains less than three percent of sulphur. Petcoke is an important raw material in the aluminium production process. It is used as carbon anode in the Hall-Heroult aluminium process.
There are two dominant suppliers of anode coke to the world's smelters, the United States and China. Output in both is declining. In the U.S. this is largely a function of the increasing use of shale oils, which "reduce either the quality or quantity of petcoke produced, or both," the study argues.
A similar trend has been evolving in China, reflecting changes in oil refining technology. In both cases what is an essential ingredient in the process of making aluminium is nothing more than a low-value by-product for oil refiners.
The study examines every other possible supply source but concludes that supply will be insufficient to meet smelter demand from around 2017.
The use of “unqualified” petcoke having higher sulphur content that has been rampant in China until recently, too is being checked these days. In fact, new law was signed earlier this month prohibiting the import, sale or burning of "unqualified" petcoke. An obvious standardization of the petcoke quality is soon to follow all across the globe. If it happens, Chinese smelters will have no choice other than to switch to low-sulphur petcoke, in effect killing off supply to the rest of the world. Indeed, they will themselves struggle to source sufficient supply for their own operations.
Unlike bauxite and power supply, aluminium producers have little say over how much suitable coke is produced by oil refiners. So, they will have to plan their supply chain activities and design their customer order decoupling point (COPD) more meticulously keeping availability of petcoke in mind and cut their smelter outputs accordingly.
