New petroleum coke production from Mexican state-owned Pemex may contribute to oversupply in the Atlantic basin next year, although low refinery utilisation rates and delays in completing two coking units could mute the increases.
The first official petroleum coke cargo from the new Olmeca refinery — that is still undergoing testing — may be sold in January or February 2024, market participants said. The refinery, located near the Dos Bocas port in the southern Gulf of Mexico, is expected to export much of its of 2-2.5mn t/yr of coke production capacity. This could lead to oversupply in an Atlantic basin coke market that may also be absorbing additional exports from Venezuela, following a temporary end to US sanctions on that country's oil products.
Mexico has not been a major exporter of coke in years, as domestic demand has exceeded Pemex's supply. The company produced 1.21mn t from January-September of this year, according to energy ministry (Sener) data. Production from Olmeca has yet to be reported. And a month-on-month rise in Pemex's crude exports in September suggests that the start of the Olmeca refinery is facing further delays.
On the domestic side, other planned Pemex coker start-ups could add pressure to Mexican demand for imported coke, which has already been weaker recently. But the company's focus on completing Olmeca has resulted in delays for these other projects.
Pemex is working to bring two other coker units online — one at its 315,000 b/d Tula refinery and the other at its 330,000 b/d Salina Cruz refinery. Tula's inland Mexico location will mean its future coke volumes will supply the domestic market, a coke trader said. The Tula coker would significantly boost Pemex's coking capacity, adding 1mn t/yr.
But despite President Andres Manuel Lopez Obrador as recently as last month pledging to complete the Tula coker by December, Pemex's chief executive Octavio Romero told congress on 9 October the company had pushed back its completion to July 2024. And in its third-quarter earnings call on 27 October, Pemex said the Tula coker is now expected to start running in the fourth quarter of 2024. Given the uncertainty around its start-up date and weak Pemex refinery utilisation rates in recent years, domestic buyers are unlikely to lower their volume requests for imported coke in ongoing term negotiations for 2024 based on Tula's potential supply, a market participant said.
"We will see new petcoke in Mexico, yes," one coke trader said, "But not fully at capacity."
Mexican coke consumers may seek fewer imported coke term contracts in 2025, as the Salina Cruz refinery is expected to launch its coker in the fourth quarter of that year.
