Needle coke demand growth to tighten anode coke

Rising lithium-ion battery production is set to significantly raise demand for needle and ultra-low-sulphur petroleum coke in the coming years, pressuring supply of anode-grade petroleum coke for the aluminium industry.

While there is some new needle coke capacity coming on line, planned supply growth is far outweighed by forecasts of demand growth. Because of this imbalance, a number of refiners are considering converting cokers to be able to produce needle coke,which is used to produce lithium-ion batteries for electric vehicles (EVs).

"I think globally only 2-3pc of coke production is needle grade, and there is a steep increase in demand for that," one refiner said. "If you can produce it, there is little reason you would produce a grade that is bringing in less revenue."

Producing needle coke requires different feedstocks and operating conditions, which can be more costly, so it will not make economic sense for every coker to convert. But aluminium producers may find the availability of anode-grade coke dwindling if demand for needle coke begins to significantly rise, incentivising more refiners to convert capacity, the refiner said.

"We have seen growing interest in this area and have ongoing projects to assess such conversions now," said Brian McCarthy, vice president of process technology and products for Wood, a consulting and engineering firm.

Growing demand for EVs is increasing the need for lithium-ion batteries and the synthetic graphite used to make them. Major automakers are expanding battery production in order to support massive growth in EVs — Toyota announced in September that it had committed ¥1.5 trillion ($13bn) towards developing and supplying batteries by 2030, Nissan announced in November that it will invest ¥2 trillion in EV batteries and EV development in the next five years and General Motors plans to spend $35bn by 2025 on EV development, including its own battery plants.

Governments are also pushing policies to support EV growth. US President Joe Biden in December issued an executive order directing the federal government to procure only zero-emission vehicles by 2035. And India has set ambitious targets for EVs to make up a large proportion of private and commercial vehicles by 2030.

The batteries for these EVs are likely to be made with anode material produced from petroleum coke, either needle coke or very low-sulphur sponge coke. While some battery technologies that would not use coke as a feedstock are under development, these have not been commercialized on a large scale.

Producing a battery with 1GWh of storage capacity typically requires 1,200t of anode material, with each tonne of anode made from 2t of petroleum coke, according to one battery producer.

There was roughly 747 GWh of lithium-ion cell manufacturing capacity globally in 2020, with this figure expected to grow to 2,492 GWh by 2025, according to the US Department of Energy. This would imply demand for needle and ultra-low-sulphur coke could rise to as much as 6mn t within the next four years. One Chinese battery producer alone expects its demand for coke to rise more than tenfold by 2025 from 2021 levels.

But needle coke capacity has been slow to grow. China makes up the bulk of production capacity, with an estimated 1.1mn t/yr of petroleum-based and 1.03mn t/yr of coal tar pitch-based capacity, although typical annual production is estimated to be only around half this amount.

Outside of China, refiner Phillips 66 is the main producer, with needle cokers in the UK and US capable of producing around 400,000t annually, according to Argus Consulting. There is also a moderate amount of coal-based production in Japan and South Korea. Furthermore, much of the world's current needle coke production goes to producing graphite electrodes for electric-arc furnace steelmaking, a market which is also growing.

There are a couple of new needle cokers coming online. Russian refiner Gazpromneft was set to commission a coker at its 350,000 b/d Omsk refinery late last year that would be capable of producing 31,000t/yr of needle coke. And Indian state-controlled refiner IOC plans to add 56,000t/yr of calcined needle coke capacity at its 300,000 b/d Paradip refinery.

But demand growth still looks likely to outweigh supply growth, which could mean that more coking capacity that would produce anode-grade coke will be directed to needle coke and graphite production.

By Lauren Masterson