31 mount pleasant, london wc1x 0ad uk tel +44 20 7903 2000 fax +44 20 7837 0976 london | beijing |...
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31 Mount Pleasant, London WC1X 0AD UK
Tel +44 20 7903 2000 Fax +44 20 7837 0976www.cruanalysis.com
LONDON | BEIJING | PHILADELPHIA | WASHINGTON
Petcoke and its role within the aluminium industry
McCloskey 6th Petcoke Conference
May 2008
Calvin Graham
Consultant CRU Analysis
E-mail calvin.graham@crugroup.com
Tel: (+44) 20 7903 2280
Slide 2
CRU is the world’s leading independent provider of consultancy, business analysis and conferences focusing on the mining, metals, power, cables, fertilizers and industrial chemicals sectors.
o Founded in the late 1960s
o Privately owned to ensure its independence
o Located in London, Beijing, Santiago, Sydney, Rio de Janeiro and key centres in the United States
o Employs more than 200 experts
Fundamental Analysis Strategic Consultancy Conferences & Events
Slide 3
o A team of 20 analysts, metallurgists, chemists and economists
o A multi-cultural team in the UK and abroad
o Undertake research, analysis, client and site visits, innovation
o Strength in depth to allow in-depth knowledge in areas such as power, carbon products and semi’s markets
o A recognition and emphasis on China, hence our office in Beijing
o 2008 aluminium conference in Chongqing, China Sep 21-24.
The Aluminium Business Unit
Slide 4
Structure of Presentation
• Aluminium market outlook
• Petcoke consumption by the aluminium industry
• Anode-grade petcoke production forecast
• Quality and pricing implications for smelters
• Conclusions
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$/to
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LME3M 100 day MA
Data: LME; daily offical 3M price to 10th March
Aluminium price performance
LME 3Maluminium price (May 06 – Jun 08)
Forecast: rising operating costs lead to continued strong aluminium prices
Highlights:
-Reduction in expected market surplus and escalating costs from a weaker US dollar and higher oil prices lead to 2008 price rise
-Market balance in 2008 cut to 660,000 tonnes on output disruptions
-Strengthening yuan and higher Chinese power prices lead to 2009 price increase, surplus in H1 2009 all in China
-Continued high prices forecast 2010-2012 on higher costs expectation and tighter S/D balance
Risks: Global recession leads to fall in demand and lower LME prices Yuan appreciates more than our base case, leads to higher prices
coke demand, 2007-2012 ('000 tonnes)
Sector 2007 2008 2009 2010 2011 2012
Aluminium 18825 20598 22150 23623 25307 26847
(of which China) 6214 7255 8439 9410 10125 11012
EAF Steel 1850 1867 1867 1888 1903 1906
Recarburiser 1959 2042 2098 2197 2305 2410
TiO2 1144 1169 1197 1224 1252 1281
Other 2754 2929 3065 3174 3273 3352
WORLD TOTAL 26,532 28,605 30,378 32,105 34,040 35,796
Data: CRU
World forecast for calcinable green petroleum
(Chinese Aluminium)
31%
EAF Steel5%
Recarburiser7%
TiO24%
Slide 7
Calcinable green coke consumption forecast
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30
07 08 09 10 11 12
China
Middle East
CIS
Asia
N. America
L. America
Europe
Africa
E. Eur
Oceania
Slide 8
Calcinable green coke consumption forecast for the aluminium industry
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0
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08 09 10 11 12
Growth during 2007-2012
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1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
4-5% Sulphur Anode useable Grade:
3-4% Sulphur Anode useable Grade:2-3% Sulphur Anode useable Grade:
1-2% Sulphur Anode useable Grade:0-1% Sulphur Anode useable Grade:
Aluminium Demand
Slide 9
World anode grade production has kept up with smelter consumption rates in recent years
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1995
1996
1997
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2005
2006
2007
2008
2009
2010
2011
2012
4-5% Sulphur Anode useable Grade:
3-4% Sulphur Anode useable Grade:2-3% Sulphur Anode useable Grade:
1-2% Sulphur Anode useable Grade:0-1% Sulphur Anode useable Grade:
Aluminium Demand
Slide 10
This will change over the next few years as the production of new low sulphur cokes stalls
Slide 11
The rapid rise of CPC costs in the last year
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Germany ($/t)
India ($/t)
USA ($/t)
China ($/t)
Weighted Index
Slide 12
The rise and fall of Chinese green coke exports during 2005-2008
Slide 13
Chinese production of high quality cokes will not keep up with the rate of aluminium expansion
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1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Thou
sand
s
4 - 5% sulphur
3.5 - 4% sulphur
3 - 3.5% sulphur
2.5 - 3% sulphur
2 - 2.5% sulphur
1.5 - 2% sulphur
1 - 1.5% sulphur
0 - 1% sulphur
Consumption (Alu)
Slide 14
Low sulphur levels are not the only concern when judging quality vs. marginal material
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0.3/11 0.4/12 0.5/13 0.6/14
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Ash and vanadium content
4.5-5%
4-4.5%
3.5-4%
3-3.5%
2.5-3%
2-2.5%
1.5-2%
1-1.5%
0.5-1%
0-0.5%
demand:
Slide 15
Prices in China have diverged with some smelters forced to take lower grade materials:
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Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Anodes
Calcined High
Calcined Average
Calcined Low
Green High
Green Average
Green Low
Calcined Export
Green Export
2008
US$/t FOB
2007
Slide 16
Options for the aluminium industry are fairly limited:
1. Continue to pay higher prices until highest cost smelters close
2. Use lower grade material: either higher metal content or higher sulphur levels
3. Some new smelter projects in the Middle East may set up joint coke/calciner projects
4. Blend lower and higher grade materials together
5. Develop new smelting technology; eg. sulphur scrubbers or inert anodes
Slide 17
Inert Anodes are on the horizon, although still a few years away
1. Ceramic Metal Oxides – Physical properties are a problem, as are chemical reactions with the electrolyte
2. Metal-Based Anodes – such as Fe-Ni-Cu alloys, corrosion and contamination issues
3. Cermets – ceramic/metal mix to take advantage of each set of properties, NiFe2O4 + NiO + Cu is most tested
Researched being made by:• Moltech• Alcoa• NAT• Argonne National Lab• Noranda• UC RusAl• Chalco• Rio Tinto Alcan• Hydro• etc
Slide 18
Acceptance of lower grade cokes will bring down the price of coke in China
Base case assumes an average rise in
acceptable sulphur level from 2.5% to
3.3%
Calcined coke prices peaking at just over $700/t
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0
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95 96 97 98 99 00 01 02 03 04 05 06 H1 07
H2 07
H1 08
H2 08
H1 09
H2 09
H1 10
H2 10
H1 11
H2 11
H1 12
H2 12
4-5% coke available
3-4% coke available
2-3% coke available
1-2% coke available
0-1% coke available
Aluminium demand for coke
High price Scenario
base case price
Slide 19
Conclusions
We see strong growth in the primary aluminium market: 17.4m tpy of new capacity between 2007 and 2012.
In the west, 3.2m tpy of new anode grade green coke demand The only new major sources of coke for the aluminium industry will be
Brazil and China Quality will decrease and prices for high quality will continue to
escalate at smelters continuing to demand tight specifications Higher quality material will continue to carry a premium, but average
prices will stabilise and plateau
Slide 20
Primary AluminiumRaw Materials
Calvin GrahamConsultantCRU Analysis31 Mt PleasantLondon, WC1X 0ADUK+44 (20) 7903 2212calvin.graham@crugroup.com
Your contact at CRU:
Thank you for your attention.• We publish a bimonthly overview of
the latest developments in the anode grade carbon market including regional pricing and short term market assessments. Also available on-line at our www.crumonitor.com website.
• The 5-Year Carbon study – Published each November with a half-yearly update (through a conference call) covering the global carbon market and is a key tool for well-informed decision making. This year we continue to build on our findings about the carbon situation in China, especially concerning future availability of anode grade green petroleum coke.
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