The premium for US fuel-grade mid-sulphur petroleum coke over high-sulphur coke could widen in the coming weeks because of the planned shutdown of a mid-to-high-sulphur coke producer.
Fob US Gulf coast mid-sulphur coke's premium to the high-sulphur specification has remained slim, at around $4/t since 18 December. This is largely because of limited demand from countries that place more value on sulphur content, including Turkey and China, particularly as coal prices have fallen.
Some US Gulf refineries have also been producing coke with lower-than-typical sulphur levels, possibly because crude slates shifted after heavy sour crudes, especially from western Canada, gained in price, partly on the effect of the opening of the 590,000 b/d Trans Mountain Expansion pipeline exporting this crude by sea. Prices for US sour crudes, like US Gulf medium sour Mars, have been higher as well. This has likely shifted refineries away from these grades toward lighter, sweeter crudes, which tend to produce cokes with lower sulphur contents. Heavy sour Western Canadian Select (WCS) crude's discount to the light sweet Nymex calendar month average (CMA) crude benchmark in Houston narrowed to $2.88/bl on 23 December, its narrowest discount in 2024.
But the discount for WCS to CMA Nymex has since grown to $4.70/bl as of the latest assessment on 24 January. And some refineries' coke fell in sulphur content because of refinery upsets that necessitated a change in feeds. Each of these factors could make the increase in mid-sulphur supply temporary.
The premium may also widen because LyondellBasell's 264,000 b/d Houston refinery, which produces a mid-to-high-sulphur coke, is shuttering operations starting this month. The Houston refinery has a marketable coke production capacity of 5,500 t/d, making it the seventh largest coke producer in the US Gulf coast, according to the US Energy Information Administration.
LyondellBasell's move to shut the Houston refinery may encourage other refineries to increase run rates, as the closure should boost refining margins. Since most US Gulf refineries produce higher sulphur coke, higher run rates at the remaining facilities would likely increase high-sulphur supply, pushing these prices lower and widening the spread. Much of the recent jump in US Gulf coke prices has been because of tight spot supply.
There are also signs of recovering demand in the Chinese market, as lower-sulphur anode-grade coke prices have surged and buoyed prices for lower-sulphur fuel-grade coke. China's market participants are also more widely considering US mid-sulphur coke as new US president Donald Trump has potentially softened his anti-China rhetoric, with no new shots fired in the US-China trade war for the time being. Many Chinese traders shied away from US coke following Trump's election in November.
