The maintenance peak has passed. Oil coke production in the third quarter may reach a new high.

As is well known, the first half of each year is typically the peak season for maintenance at domestic refinery facilities—and this year is no exception. Although... In 2022, although the number of units undergoing maintenance at China’s major refining plants was relatively low, local refineries experienced a peak period of maintenance. Particularly in April and May, delayed coking units at local refineries across China underwent concentrated maintenance, causing a sharp drop in petroleum coke production and bringing a wave of positive market conditions. As we enter the final month of the third quarter, what is the status of domestic petroleum coke supply?

The data shows that, In the first quarter of 2022, the capacity utilization rate of delayed coking units at domestic refineries was 66.2%, down 0.314 percentage points year-on-year. In the second quarter, the capacity utilization rate of these units fell to 61.31%, a year-on-year decline of 2.4 percentage points. In the first two months of the third quarter, the capacity utilization rate of delayed coking units at domestic refineries reached 67.9%, up 5.69 percentage points year-on-year. Figure 1 shows that in the third quarter, the capacity utilization rate of domestic delayed coking units remained notably high.

The data shows that, From January to August, domestic petroleum coke production totaled 18.1 million tons, roughly flat compared to the previous year’s output. However, looking at the distribution of supply, production increased year-on-year in January as well as in July and August 2022, while output declined in all other months. In particular, production growth was relatively significant in July and August, with year-on-year increases ranging from 6.06% to 7.86%. Yet starting from late August, some independent refineries have begun reducing or even halting operations at their delayed coking units, and several major refiners have also scheduled maintenance on their delayed coking units. These factors will likely have a certain impact on domestic petroleum coke production. Nevertheless, this month, the 2-million-ton-per-year delayed coking unit at Shenghong Refining & Chemical and the 1.3-million-ton-per-year delayed coking unit at Keyu Petrochemical may resume operations. Therefore, it is expected that domestic petroleum coke production in September will likely remain at a high level.

Domestic petroleum coke production in the third quarter may be... Around 7.2 million tons—this figure not only exceeds the output from the first two quarters of the year but is also expected to reach the highest level for the same period in four years. Of course, although the total output of domestically produced petroleum coke increased in the third quarter, the quality of crude oil processed by domestic independent refineries during that quarter was less than encouraging, leading to a significant decline in petroleum coke indicators. As a result, the market continues to face the issue of uneven distribution of these indicators.

The data shows that, In 2022, domestically produced petroleum coke continued to be dominated by Grade 4, accounting for 40%; Grade 5 petroleum coke accounted for 8%, and pellet coke accounted for 5%. The combined output of sponge coke and pellet coke—with sulfur content exceeding 3%—totaled 53%, an increase of 5 percentage points over the previous year. Consequently, domestically produced petroleum coke still primarily features medium-to-high sulfur levels, and this year saw a significant decline in the production of medium- and low-sulfur petroleum coke.

Overall, In 2022, downstream sectors of petroleum coke saw increased requirements for petroleum coke specifications. However, domestic petroleum coke specifications have noticeably shifted toward higher sulfur content, leading to a mismatch between upstream and downstream resources. It is expected that the domestic market for medium- and low-sulfur petroleum coke will continue to enjoy strong support. Whether prices for high-sulfur petroleum coke can rise remains highly dependent on close monitoring of specification standards.

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