The domestic China petcoke market remains relatively stable, with the usual price dips and peaks within a channel. One of the reasons why the price won't rise to previous highs is down to the enormous volumes of coke being held at port.

According to the team, China currently holds as much as 4 million tonnes of petcoke at the port. The volume isn't easy to measure, as it is held in bond and is not "imported" until it is sold. Shandong province has as many as 2 million tonnes at one port alone.

But how do they afford this? Imports surged at the end of 2022 when the prices were through the roof. Some of the coke sitting at the port has been there since then. That's a lot of interest charges.

Monte Zhang said the first thing that happened was that the small players were no longer in the game. They can't afford the financing charges, and the market has devolved to the majors.

Those guys are diluting the product. That is, they are seeding the high-cost product with more recent purchases that are much lower cost. To me, that's like asking if you rip the band-aid off a little at a time or all at once. It's another example of how debt financing, loans, interest, and so on are viewed differently in China.

The net result is that the importers continue to bring products in at the low end of the market. That means that China will remain "long" on petcoke for a long time to come.