Energy Argus Petroleum Coke

Energy Argus
Petroleum Coke
w w w. a r g u s m e d i a . c o m
Petroleum Coke Market Prices, News and Analysis
9 November 2011
Argus fuel-grade petroleum coke spot

prices: October
Coke Market Overview
Atlantic Basin
$/mt
Fob US Gulf Coast

40 HGI
70 HGI
Low
High
Midpoint
Low
High
4.5pc Sulphur
74.25
75.25
74.75
75.25
76.25
Midpoint
75.75
6.5pc Sulphur
63.00
64.00
63.50
64.00
65.00
64.50
Delivered Northwest Europe - ARA

40 HGI
Low
High
4.5pc Sulphur
101.25
102.25
6.5pc Sulphur
90.00
91.00
70 HGI
Midpoint
Low
High
101.75
102.25
103.25
Midpoint
102.75
90.50
91.00
92.00
91.50
Delivered Spanish Mediterranean

40 HGI
Low
High
4.5pc Sulphur
101.25
102.25
6.5pc Sulphur
90.00
91.00
70 HGI
Midpoint
Low
High
101.75
102.25
103.25
Midpoint
102.75
90.50
91.00
92.00
91.50
Delivered Brazil
40 HGI
70 HGI
Low
High
Midpoint
Low
High
4.5pc Sulphur
97.25
98.25
97.75
98.25
99.25
Midpoint
98.75
6.5pc Sulphur
86.00
87.00
86.50
87.00
88.00
87.50
Pacific Basin
$/mt
Coke markets weaken, flurry of deals done

Led by the sharp downturn of fuel-grade petroleum coke
prices at the key US Gulf coast producing center, all global
coke prices weakened in October and buyers mainly in
China found spot coke prices an attractive option compared with other fuels.
After dropping only slightly in September, high-sulphur, hard
coke prices quoted by Argus dropped by $15 in October to an
average of $64/mt fob US Gulf coast. Prices for 4.5pc sulphur
fell $19.75/mt to an average of $75.25/mt fob US Gulf coast. As
a result, the differential between medium- and high-sulphur coke
narrowed to $11.25 in October from $16 in September.
Eight spot cargoes of high-sulphur, hard coke were reported
to have traded on an fob US Gulf coast basis in October at $60/
mt to $67/mt. The cargoes ranged in size from 50,000mt to
62,000mt and were to load in November and December. Most
of the cargoes were destined for China.
Another deal for high-sulphur, hard coke was done substantially lower at $52.50/mt fob US Gulf coast for 50,000mt loading
in November. The cargo was thought to be headed to Europe.
Continued on page 2
Coke and coal freight rates

EndOct
4-week average
USGC to ARA
27.00
25.63
Venezuela to ARA
25.00
24.13
USGC to Mediterranean
27.00
25.88
USGC to Brazil
23.00
22.50
USWC to Japan
24.00
23.63
Puerto Bolivar to ARA
18.55
18.71
Puerto Bolivar to USGC
10.00
10.13
Puerto Bolivar to USEC
17.30
17.64
Fob US West Coast

45 HGI
Low
High
Midpoint
3.0pc Sulphur
112.00
115.00
113.50
4.5pc Sulphur
98.00
100.00
99.00
Panamax (64-77,000 dwt)
Cfr China
45 HGI
Low
High
3.0pc Sulphur
153.00
155.00
154.00
4.5pc Sulphur
139.00
141.00
140.00
Midpoint
Cfr India
40 HGI
Low
High
4.5pc Sulphur
131.50
132.50
6.5pc Sulphur
121.50
122.50
Page 1 of 19
Supramax (45-50,000 dwt)
70 HGI
Midpoint
Low
High
Midpoint
132.00
133.50
134.50
134.00
122.00
123.50
124.50
124.00
Handymax Coal (up to

60,000 dwt)
In This Issue
NCRA to replace coker in Kansas
Page 6
US: Coke exports still up on year
Page 8
Rio Tinto to spin off 13 aluminum assets
Page 12
Dry bulk fleet growth at peak levels
Page 13
Copyright 2011 Argus Media Ltd
Energy Argus
Petroleum Coke
9 November 2011
US Gulf Coast hard coke spot price
$/mt
150
120
90
60
30
0
Oct
Dec
Feb
p
Apr
4.5pc
g
Aug
Jun
Oct
6.5pc
US West Coast hard coke spot price
$/mt
150
120
90
60
Asian markets
30
0
Oct
Dec
Feb
Apr
p
3.0pc
Jun
Aug
g
Oct
4.5pc
Coke pc of coal delivered NW Europe
pc
120
100
8077 78
74 7572 7772
80
81
79
88 86 91 91
79 77 80 80 76
67
60
73 72
63 62 66
58
40
20
Oct
Dec
Feb
Apr
4.5pc
Jun
Aug
Oct
6.5pc
Coke pc of coal delivered Spanish Med
pc
120
100
80
87 84
83 8079
76 7974
8380
60
91 88 90 93
82 79 80 83 81
71 75 73
65 63 67
60
40
20
A coke cargo with sulphur below 6.5pc, but above 5pc, also
traded on a cfr China basis at $128.30/mt for 62,000mt, loading
in November or December. Freight for the voyage was thought
to be around $55/mt.
Additionally, three cargoes of Venezuelan-spec, 4-4.5pc
sulphur coke, traded in October between the low$70s/mt and
the upper $70s/mt on a fob US Gulf coast basis.
While October was easily the most active spot market to date
in 2011, some expect November and December to remain active
as a result of renewed buying interest especially from China.
It was clear in October that sellers were offering Venezuelan
petroleum coke at discounts to the Pace index. In some cases
the discounts were reported as high as the Pace high -$8/mt.
This is in stark contrast to contracts signed in the last two years
at premiums as high as Pace high +17/mt for material from the
four upgraders at the Jose complex.
Oct
Dec
Feb
Apr
4.5pc
Page 2 of 19
Jun
6.5pc
Aug
Oct
A US Gulf coast producer, when asked if coke prices were

nearing a floor, said the rate of decline is starting to decrease,
but that near-term prices will largely be determined by what
Chinese buyers are willing to pay.
In China, prices of imported fuel-grade petroleum coke
lost more ground in October as many end-users faced tight
cash flows, but substantial volumes of coke were purchased
by Chinese buyers. Septembers imports of fuel-grade coke at
251,900mt were almost double the 131,000mt imported a month
earlier, and signs point to huge import levels in the final quarter
of this year.
After imports of fuel-grade coke averaged 431,440mt in the
first five months of this year, imports dropped to an average of
244,550mt from June through September. But despite the fourmonth downturn, China imported 3.14mn mt of coke in the first
nine months of this year and is well on its way to breaking last
years import record of 3.55mn mt of fuel-grade coke.
Spillover sentiment from lower thermal coal prices added to
downward pressure to petroleum coke prices in October. And
bearish signals from Chinas building sector caused sluggish
aluminum sales, which added further downward pressure on
domestic coke prices.
Coal to coke Btu comparisons
cif ARA
Western Mediterranean Cinergy (Ohio barge)
$/
pc of
CO2
$/
pc of
CO2
$/
pc of
SO2
mmBtu coal adjusted mmBtu coal adjusted mmBtu coal adjusted
Coal
4.94
4.96
4.83
5.27
3.45
3.45
4.5pc
Coke
3.25
66
3.74
3.25
67
3.74
2.90
84
2.90
6.5pc
Coke
2.89
58
3.37
2.89
60
3.38
2.54
73
2.54
Energy Argus
Petroleum Coke
9 November 2011
US coke export freight
$/mt
24
21
18
15
12
Oct
Dec
Feb
Apr
USGC-ARA
Jun
Aug
Oct
USWC-Japan
Delivered coke and coal in NW Europe
$/mmBtu
5.5
5.0
4.5
40
4.0
3.5
3.0
Oct
Dec
Feb
Apr
Coal
Jun
Aug
A 50,000mt cargo of 6pc sulphur coke from the US was due to

arrive at Shandong in early November and was hearing offers at
$133/mt CFR. Some spot cargoes of 5.5pc sulphur from the US
were heard done at around $127/mt CFR.
An importer in east China sold some 3.0pc sulphur cargoes at
an equivalent of $153/mt CFR.
No firm demand was heard by Chinese importers for cargoes
beyond 2011. Market participants expect the cash flows to tighten further at year-end when banks are expected to reduce loan
exposure by calling back a significant number of corporate loans.
The market for coke exported from China is also weakening as
demand falls from target markets such as India, Japan and the US.
Posted prices of high-sulphur petroleum coke at Sinopec
Qingdao and Tianjin refineries are unchanged at $199/mt. But
some actual deals were heard done at a large discount to that
price. Sinopec is expected to adjust prices downwards in November to ease its high stock levels.
Prices for imported petroleum coke in India slipped further
in October with market activity interrupted by the nine-day
Oct
Coal markets
4.5pc Coke
End-Oct
Oct ave.
Oct ave.
$/mt
$/mt
$/mmBtu
cif ARA 6,000 kcal
119.93
117.69
4.94
fob Richards Bay
108.60
110.64
4.65
fob Newcastle
117.37
119.39
4.51
22
cif Japan 6,700 kcal
135.77
137.92
5.19
19
CSX 1pc Sulphur US Rail
83.50
83.57
3.03
Big Sandy 1pc Sulphur US Barge
81.24
81.07
3.06
11,500 Btu 5.0 lbs SO2/mmBtu
81.50
81.75
3.43
6,000 kcal
95.00
96.81
4.07
Coke and coal freight into NW Europe
$/mt
25
FOB New Orleans
16
13
10
FOB Hampton Roads
Oct
Dec
Feb
Apr
Richards Bay Coal
Jun
Aug
Oct
USGC Coke
USGC LLS crude oil refinery margins
12,000 Btu
112.50
113.06
4.75
6,000 kcal
106.00
106.06
4.45
Emissions markets
$/bl
16
12
End-Oct
Oct ave.
US SO2 Allowances ($/st)
1.00
0.88
US NOx Allowances ($/st)
10.00
10.00
Argus European CO2 Index (/t CO2e)
10.18
10.35
End-Oct
Oct ave.
Crude and refined products
$/bl
Maya US Gulf Coast
102.81
99.73
ANS US West Coast
113.39
110.34
-4
9.62
13.33
Brent/Dubai spread
-3.47
-6.17
3pc Fuel Oil USGC
100.50
98.16
Asphalt, Western Gulf Coast ($/st)
490.00
465.63
22.31
30.03
WTI/Maya spread
Oct
Dec
Feb
Apr
Gasoline
Page 3 of 19
Jun
Heating oil
Aug
Oct
USGC Refining Margin (3:2:1)
Energy Argus
Petroleum Coke
9 November 2011
US refinery utilization five-year range
pc
100
90
80
70
60
Jan
Apr
Jul
Sep
Dec
USGC coal implied coke forward curve
$/mt
110
100
90
80
70
PQ
PQ+1
PQ+2
Oct-10
PY
PY+1
Oct-11
CIF ARA coal limplied coke forward curve
$/mt
140
Coal, freight
130
120
110
100
PQ
PQ+1
PQ+2
PQ+3
Oct-10
PY
PY+1
PY+2
Oct-11
WTI/Maya spread
$/bl
18
12
Key coke-related coal prices prices dipped in October. Delivered northwest Europe coal prices at $119.93/mt on 31 October
were down from $121.07/mt a month earlier. On 8 November
prices closed at $118.01/mt.
Coal fob Richards Bay, South Africa, dropped to $108.60/
mt at the end of October, down 4.6pc from $113.78/mt on 30
September. The coal price on 8 November stood at $107.05.
Fob Newcastle, Australia, coal at $117.37/mt on 31 October
was down from $121.85/mt at the end of September. And prices
fell further to $116.16/mt on 8 November.
The arbitrage window for US coal sales to Europe remained
closed late in October unless shippers had locked in belowClarksons coke freight rates
60,000 mt (Panamax) $/mt
$/mt
1-Nov
1-Oct
1-Sep
to European Continent
26.45
25.65
24.05
to Spanish Mediterranean
25.40
24.60
23.05
to Black Sea
29.65
28.65
26.75
to European Continent
25.45
25.27
23.50
to Spanish Mediterranean
24.50
24.30
24.50
to Japan
22.80
22.80
23.40
US Gulf Coast
0
-6
-12
Dussehra festival at the start of the month and the Diwali festivities during the last week of October.
The lower prices did attract some buyers and spot purchases
were heard to be transacted at around $122/mt for 6.5pc sulphur
cargoes with freight from the US Gulf increasing to around $53/
mt. But these purchases were modest, with building activity and
demand from cement yet to pick up after the monsoon season.
Demand is expected to remain weak as the holiday mood continues with the Eid festival during the first half of November.
The US exported 93,648mt of fuel-grade coke to India in
August, and shipped 388,022mt during the first eight months of
this year.
To keep pace with import prices and be competitive, domestic petroleum coke from Reliance is being sold at around $121/
mt. Taking heed of the lackluster market sentiment, additional
domestic petroleum coke capacity which had been expected to
come onstream in the current quarter is now only expected to be
offered in the next quarter.
Worries that Spanish petroleum coke may find its way to
India in bigger quantities added to market expectations of weakening prices. Repsols Cartagena refinery, operated by Reficar,
has plans to sell around 810,000 mt of petroleum coke annually
to Indias Rain Commodities. While the major portion will be
anode grade, fuel-grade petroleum coke is likely to be part of the
deal, market participants said.
US West Coast
Oct
Page 4 of 19
Dec
Feb
Apr
Jun
Aug
Oct
Energy Argus
Petroleum Coke
9 November 2011
market transportation rates. Trading interest even slowed for US

Gulf coast exports, which had been the more active US market.
Most US steam coal exports are being shipped under previously signed contracts, with deal-making scarce for new deliveries in the next 90 days. But the current slowdown belies the
overall strength in demand.
Ocean freight rates to move petroleum coke on panamax vessels from the US Gulf coast to the European continent, Spanish Mediterranean and the Black Sea were up between 3.1pc
and 3.5pc in October, according to shipping broker Clarksons.
Rates from the US Gulf coast to the European continent stood at
$26.45/mt on 1 November, up from $25.65/mt a month earlier.
Supramax freight rates to move coke from the US Gulf coast
to ARA as quoted by Argus ended October at $27/mt, up from
$22.50 earlier in the month. Rates from the Gulf coast to the
Mediterranean also climbed to $27/mt at the end of October,
from $23.50/mt in the first week of the month.
Some attributed the rise in October supramax freight rates
to Chinas increased purchases of spot petroleum coke in the
month, but statistics were not yet available.
Market news
ConocoPhillips is set to bring the new 65,000 b/d coking unit

at its Wood River, Illinois, refinery on line at the end of this
month. The coke will make its way down the Mississippi River
to Gulf coast terminals for export. It is unclear when the company expects to ship the first cargo of its new coke production.
Venezuelas PdV reportedly issued another tender for a
couple of medium-sulphur petroleum coke cargoes in October.
Other details about the tender are unclear, but the last time PdV
attempted to sell coke by tender, in September, it found the bids
too high, according to market sources. Increased availability of
Venezuelan coke is expected to further narrow the medium/high
sulphur spread. The European spot market remained largely
quiet in October, but at least one high sulphur, hard coke, cargo
that was transacted in the month was said to headed that direction. Discussions for 2012 supplies are said to be wrapping
up with many of the end users in Euro/Med, and suppliers say
volumes for 2012 are little changed from 2011. Most cement
makers in Euro/Med are still experiencing poor demand for cement, so demand for petroleum coke remains subdued.
As US producers endeavor to meet end-of-year inventory targets for petroleum coke, juggling stocks at refineries and terminals, large volumes of mostly high sulphur coke could make their
way into the spot market before year end. It is clear that China is
buying high-sulphur coke for power generation and the cement
industry, not merely medium-sulphur coke for the glass industry.
And demand has jumped during the winter restocking period, a
shipping broker said. Most readily agree that as goes China during the balance of 2011, so goes the direction of coke prices.
Petroleum coke price snapshot
$/mt
Fob US Gulf Coast

40 HGI
70 HGI
4.5pc Sulphur
74.75
75.75
6.5pc Sulphur
63.50
64.50
Delivered Northwest Europe - ARA

40 HGI
70 HGI
4.5pc Sulphur
101.75
102.75
6.5pc Sulphur
90.50
91.50
Fob US West Coast
Cfr China
45 HGI
3.0pc Sulphur
113.50
4.5pc Sulphur
99.00
45 HGI
Delivered Brazil
Delivered Spanish Mediterranean

40 HGI
70 HGI
4.5pc Sulphur
97.75
98.75
6.5pc Sulphur
86.50
87.50
Page 5 of 19
3.0pc Sulphur
154.00
4.5pc Sulphur
140.00
Cfr India
40 HGI
70 HGI
40 HGI
70 HGI
4.5pc Sulphur
101.75
102.75
4.5pc Sulphur
132.00
134.00
6.5pc Sulphur
90.50
91.50
6.5pc Sulphur
122.00
124.00
Energy Argus
Petroleum Coke
9 November 2011
Coke Market News
Conocos coker almost completed

ConocoPhillips could by mid-November complete startup
work on the new coking unit at its 306,000 b/d Wood River,
Illinois, refinery, the oil company said.
The 65,000 b/d coker is part of a $3.8bn expansion project
that will increase total refining capacity by 50,000 b/d and let
the refinery run heavier and lower-cost Canadian crude.
Construction was on track to finish in October, chief financial officer Jeff Sheets told analysts in a call on 26 October.
Sheets said project startup activities were continuing as planned,
and were expected to be completed by mid-November. The
expansion project was 98pc complete at the end of the second
quarter (EAPC, 7 September, 2011, p1).
When the new unit is running, the refinerys coking capacity
will jump to 83,000 b/d, with annual coke production projected
at around 1.4mn mt. The coker was originally expected to start
up by late 2010 (EAPC, February 12, 2009, p19).
The coking unit is part of an expansion that will increase
crude capacity to 240,000 b/d from 110,000 b/d. Crude throughput will climb 16.3pc to 356,000 b/d from 306,000 b/d.
ConocoPhillips will transport the petroleum coke down
the Mississippi River for export. It is unclear if the major has
signed any supply contracts for the new coke output.
ConocoPhillips has reduced its overall refining capacity,
most recently with the decision to idle and sell or close its
185,000 b/d refinery in Trainer, Pennsylvania.
Global refining utilization in the fourth quarter should be in
the low-90pc range, Sheets said. Utilization in the third quarter
was 92pc, according to the company.
NCRA to replace coker in Kansas

The National Cooperative Refining Association (NCRA) will
build a new coker at its 81,000 b/d refinery in McPherson,
Kansas, to replace the existing coking unit, the company
said late last month.
Essar Oil expects big rise in refining margin

Indian private-sector refiner Essar Oil expects to achieve
a significant increase in its gross refining margin as a
result of an expansion project at its 280,000 b/d Vadinar
refinery.
The first phase of the project which will lift the refinerys capacity to 360,000 b/d is in its final leg. Most of
the new expansion units and facilities have been mechanically completed and were tied into the refinerys existing units
during a 35-day shutdown in September and October.
Mechanical completion of the remaining units a 6mn
mt/yr (feed) delayed coker unit, a vacuum gasoil hydrotreater and a sulphur recovery unit is expected by the end
of the year (EAPC, 10 August, 2011, p7). Start-up of the expansion units has already begun, and the refinery will ramp
up to its increased capacity by the end of the first quarter of
2012.
A strong refining industry environment in Asia-Pacific
helped Essar increase its gross refining margin to $7.22/
bl in July-September from $6.49/bl in the same period last
year, but the company expects a more sudden and decisive
increase in margins when the additional capacity becomes
fully available.
The complexity of the refinery is being lifted to 11.8
Page 6 of 19
from 6.1 as part of the expansion project. This allows for

the processing of a much higher percentage of heavy and
ultra-heavy crudes, which are cheaper than light crudes, as
well as the production of a higher-value product mix. The
proportion of heavy and ultra-heavy crudes processed in
July-September was 75pc, up from 64pc a year earlier. But
Vadinar continued to optimize production of middle and
light distillates despite running a heavier feedstock.
In August, Essar said it would reduce dependence on Iran
for crude supplies as the Vadinar upgrade ramped up, taking
more Latin American heavy crudes.
Essar has not given a figure for crude runs in the quarter,
but said throughput at Vadinar fell to just over 265,000 b/d
in April-September from 295,000 b/d a year earlier because
of the 35-day shutdown.
The companys revenue was boosted by the higher refining margin in July-September but it swung to a loss in the
period because of foreign exchange losses. The firm lost
1.66bn Indian rupees ($33.7mn), compared with a profit of
Rs1.3bn in the same period last year.
An optimization project, which will lift capacity at Vadinar further to 400,000 b/d, is 63pc complete and is on track
to be finished by September 2012.
Energy Argus
Petroleum Coke
9 November 2011
Coke Market News
NCRA said construction will start in January 2013, and the

company plans to finish the $555mn project, described as the
largest in NCRAs history, in August 2015.The NCRA board
of directors put the coker project, which was in the planning
stages, on hold in 2008. The world economic situation was cited
as the reason for not going forward with the coking project at
that time (EAPC, 12 February, 2009, p18).
NCRAs existing 20,000 b/d, three-drum coking unit at the
McPherson refinery produces about 315,000st/yr of fuel-grade
petroleum coke, according to carbon consultant Charlie Randall.
NCRA removed a bottleneck from the coker in 2006 by adding
a coker charge tank and handling terminal, which allowed rates
to increased about 33pc in March 2007 by decreasing drum
cycle time from 24 hours to 18 hours, Randall said.
In addition to upgrading technology, the new coker will allow the refinery to run a greater variety of crude oils, company
president Jim Loving said.
Cemex chief delivers gloomy forecast

Worldwide petroleum coke prices will continue tumbling from
early 2011 highs, pressured by new supply and anemic demand, company officials for cement manufacturer Cemex said
on a third-quarter 2011 earnings conference call 26 October.
Petroleum coke is the lead fuel for the companys cement

kilns, followed closely by coal. Cheaper primary fuel costs
are expected to boost corporate earnings in the final quarter of
2011.
Western petroleum coke markets in the US and Europe
have been falling since April after reaching historical peaks in
March, according to Cemex executive vice president Fernando
Gonzalez. Compared with September 2010, prices have fallen
about 30pc, he said.
Spot prices for petroleum coke in the US Gulf coincide with
the estimate and are headed into the mid $70/mt range this fall
from March and April highs of about $112/mt for 6.5pc sulphur,
40 HGI cargos, according to Argus assessments.
Cemex expects the downward cycle to continue, with new
coker units coming on line contributing to oversupply, and
exacerbated by limited growth in consumption.
Consumption rates will be flat on the year in 2012 at the
same time that 6mn mt of new supply is coming on line, Gonzalez said. The incremental supply should start hitting the market
by the end of 2011. These dynamics will lead to further price
erosion in the fourth quarter and into next year, he said.
The companys loss widened in the third quarter to $822mn
from a loss of $89mn during the same time a year ago. Cemex
attributed much of the loss to currency fluctuations as the Mexican peso and the euro lost strength against the US dollar.
Marathon Detroit upgrade on track for 2012

Marathon Petroleums upgrades at its 100,000 b/d refinery in Detroit to enable the facility to run more heavy
crude feedstock and boost capacity by 15pc are on track
to be done in the second half of 2012, the independent
refiner told analysts at the beginning of November.
The $2.2bn Detroit heavy oil upgrading project was 73pc
complete as of 30 September, chief executive officer Gary
Heminger said while discussing third-quarter results. In
April Marathon had completed about 40pc of the project
(EAPC, 4 May, 2011, p6).
Running its refineries at full tilt in the crude-flush US
midcontinent helped capture third-quarter margins more than
three times greater than in the same quarter of last year, the
company said.
High crack spreads, a wide split between US benchmark
crude WTI and other light sweet crudes, along with an
increased influx of Canadian heavy crude favored the mid-
Page 7 of 19
continent refiner. Marathon reported an overall margin of

$13.18/bl for the period, up from $3.75/bl a year earlier.
Marathon also plans to run more Eagle Ford crude,
though it was more guarded about plans there than with opportunities in Ohios unconventional Utica shale play.
Heminger was similarly cryptic about other possible
expansions in Texas City, where BP is selling its 475,000 b/d
refinery. He answered a question regarding possible advantages of having neighboring facilities there by referring to BPs
Carson, California, refinery, which is also for sale. Heminger
said Marathon is not interested in going to the west coast for
a single stage or a single asset, adding that it will continue to
look at those facilities and see what might fit, if anything.
Marathon projected crude runs of 1.2mn b/d in the next
quarter, down from 1.37mn b/d in the third quarter. Profitability, rather than turnarounds or other bottlenecks, had
dictated such runs, the company said.
Energy Argus
Petroleum Coke
9 November 2011
Coke Market News
US: Coke exports still up on year

The US exported 20.91mn mt of petroleum coke in the
first eight months of 2011, up 4.1pc from 20.08mn/mt in
the corresponding period a year earlier, according to the
US Energy Information Administration (EIA).
Exports in August of this year at 2.6mn mt were also up
slightly from 20.58mn mt in August 2010.
Monthly exports from January through August of 2011
exceeded shipments in the same timeframe in 2010 only four
times, but exports in March and July of this year were the
two highest volumes on record. The US exported 2.95mn
mt in March and 2.92mn mt of coke in July, which was up
22.2pc from exports of 4.81mn mt in the same two months in
2010.
After shipping 2.44mn mt of petroleum coke to Mexico
in the first eight months of this year, the US is on pace to
export 3.66mn mt to the country in 2011. Exports to Mexico
from January through August were up 26.4pc from 1.93mn
mt in the same period a year earlier.
US coke exports to Japan at 2.42mn mt year-to-date
through August were down 9.7pc from 2.68mn mt in the first
eight months of 2010. Japan and Turkey were the only two
destinations on the top 10 list of countries where US coke is
shipped that saw annual declines in exports. But exports to
Japan at 383,303mt in August were higher than to any other
country.
Coke exports to Brazil totaled 1.8mn mt in the first eight
months of 2011, up 4.7pc from 1.72mn mt in the corresponding year-earlier period.
But exports to the country in August at 146,098mt hit the
lowest level since March 2010.
Shipments of US coke to China from January through
Top destinations for US petroleum coke exports

Netherlands
Morocco
T rke
Turkey
Canada
Italy
Spain
China
Brazil
Japan
Mexico
Aug-10
Aug-11
110
220
330
'000 mt
Page 8 of 19
440
550
August 2011 at 1.67mn mt were up 16.8pc from the same

period a year earlier.
Spain pushed ahead of Italy in August as the fifth-largest
recipient of US coke from January through August, as
exports in the eight-month span totaled 1.63mn mt 3.2pc
higher than the same period in 2010. US coke exports to
Spain at 217,786 in August easily surpassed the 95,463mt
shipped to Italy.
Rounding out the sixth through tenth largest destinations
for US coke in the first eight months of 2011 were: Italy,
1.57mn mt, up 17.2pc from 2010; Canada, 1.27mn mt, up
17.6pc from 2010; Turkey, 1.22mn mt, down 10.9pc from
2010; Morocco, 775,862mt, up 12.7pc from 2010; and the
Netherlands, 437,387mt, up 47.9pc from 2010.
US shipments to India from January through August 2011
at 388,022mt were up 53pc from 253,539mt in the corresponding period of 2010, pushing India to number 12 on the
list. Exports to India in August at 93,648mt were the secondhighest in 2011, trailing only July.
Falling prices attract buying interest

European buying interest for petroleum coke has increased over the past month in response to falling prices,
but some traders are still waiting to see where the price
settles before committing to deals.
A European-based trader at a recent industry conference
in Madrid said his firm was looking to implement buying
strategies for petroleum coke as the price is more competitive now.
He said the coke coming from Spain is all 5.5-6.5pc
sulphur, and that there is not a great deal of medium-sulphur
material available in Europe.
He said he is seeing producers in Asia and South America
producing low-sulphur coke and exporting it because of the
demand for this higher quality coke.
There have been a few inquiries from European utilities,
but Turkish cement traders seem to be quite active in the
market at the moment, a UK-based producer said. He added
that liquidity is expected to stall in December and he guessed
most traders are waiting until January to complete deals.
Activity is also expected to pick up in the Asian market in
the next few months.
Around 100,000mt/month of coke is being imported into
India, an Indian steel producer said. This is likely to increase
going into the first quarter of 2012 and throughout next year
if the price keeps falling, he said.
Energy Argus
Petroleum Coke
9 November 2011
Coke Market News
Delek may increase asphalt runs in coker

Independent refiner Delek US said it is evaluating a
project that would ferry more asphalt from its 80,000 b/d
El Dorado, Kansas, plant to an underutilized coker at its
Tyler, Texas, facility.
In October, the 58,000 b/d Tyler refinery ran 1,000 b/d of
El Dorado-produced asphalt through its coker, and is looking at a vacuum tower bottoms project that would increase
volumes to 2,000 b/d, company chief financial officer Mark
Cox said on 3 November in a third-quarter earnings report.
Running more asphalt through the coker would result in
the processing of more light products, Cox said.
Delek typically produces about 80,000 st/yr of petroleum
coke at its Tyler refinery.
Doubling asphalt resid to 2,000 b/d in a small, 6,500 b/d
coker would likely change the quality of the petroleum coke
from anode grade to fuel grade, carbon consultant Charlie
Randall said.
The refiner said it has the solution to secure more
relatively cheap, West Texas Intermediate (WTI)-linked oil
for its refineries even as producers are maneuvering to lock
in higher prices for that crude but the company will not
provide details about how it plans to do that.
Delek will add another 25,000 b/d of WTI-linked oil to
the crude slate at its refinery in El Dorado within the next 18
months, the company said.
That facility ran an average of 25,000 b/d in WTI-linked
crude furing the third quarter, including a mix of Arkansas
and west Texas crudes.
Chief executive Uzi Yemen said on 3 November he
expects Delek to continue to supply its Tyler refinery with
cheaper light, sweet crude.
China: September coke imports rebound

China in September imported 251,900mt of uncalcined petroleum coke, after imports in August at 131,000mt hit the
lowest level in 11 months. Septembers imports were up
sharply 197pc from only 84,700mt in September 2010.
China, through September of this year, is on pace to import
a record 4.19mn mt of uncalcined petroleum coke in 2011
after importing a record 3.55mn mt in 2010.
Cement demand drop in Spain, Portugal hits Cimpor

Portuguese cement producer Cimpor has said it is
shifting focus to emerging markets in Brazil, India and
Mozambique to offset massive declines in sales in Spain
and Portugal.
Cimpors third-quarter profit fell by a third as weakening economies in Portugal and Spain weighed on cement
sales, the company said in its financial results this week.
Cimpor is the worlds eighth-largest cement producer
and petroleum coke is considered one of the key fuels for
production, in addition to coal.
The company has bought around 1.5mn mt of coke this
year and 1mn mt of coal.
The Brazilian market remains the main growth driver
for Cimpor whose revenue grew 8pc over the third quarter,
the company said.
The countrys market is being driven by higher cement volumes and increasing concrete contributions in the
build-up to the football World Cup and Olympic Games
to be held in 2014 and 2016, respectively. Cimpor plans to
increase its cement production by 50pc in the country.
Page 9 of 19
But Portugal and Spain have had a drop in cement and

clinker sales in 2011, especially in the third quarter, Cimpor
said.
Demand contracted in Portugal by 12pc while in Spain
it fell 14pc over the three months. Exports from the region
were down by 45pc despite the cement price edging higher
by 2pc.
Both Mozambique and India reported surprisingly strong
results for Cimpor.
Third-quarter cement demand increased 20pc in Mozambique while cement prices moved up 11pc. Cimpors cement
plant in Mozambique is being converted to handle thermal
coal and petroleum coke, the company said.
Emerging demand was also seen from new entrants in
the Indian market, which had eroded recent price rises in
the country. Chinese and Turkish operations also performed
strongly over the quarter, Cimpor said.
Cimpors net income fell to 48.6mn ($67mn) in the third
quarter, while revenue declined 0.3pc from a year earlier to
591.5mn.
Energy Argus
Petroleum Coke
9 November 2011
Coke Market News
In the first nine months of 2011 China imported 3.14mn

mt of uncalcined petroleum coke, which was up 29.8pc from
2.42mn mt in the corresponding period of 2010.
Given strong spot sales to China in October, the countrys
imports are expected to surge in the final two months of
2011.
Chinas exports of calcined petroleum coke surged to a
single-month high of 193,300mt in September. And exports in
the first nine months of 2011 established a new annual record
of 1.06mn mt eclipsing the previous record of 938,319mt
exported in 2006.
China is well on its way to setting a record for uncalcined
coke exports. From January through September China exported 1.24mn mt of uncalcined coke, and is on pace to export
1.65mn mt in 2011 which would break the record of 1.43mn
mt set in 2006.
Exports of uncalcined coke in September at 140,600mt were
up 63.5pc from 86,000mt in the same month in 2010.
US coke consumption up in July

Consumption of petroleum coke by the US electric power
and industrial sectors at 538,000st in July 2011 was tied
with March for the highest level of consumption since
January, but was still down 8.6pc from the same period a
year earlier, according to the Energy Information Administration (EIA).
But since July of 2009 the two sectors combined to burn
more than 538,000st of coke in a single month only twice.
Total coke consumption by the electric power and industrial sectors in the first seven months of 2011 at 3.34mn st
was down 6.4pc from 3.57mn st in the corresponding period
in 2010.
The EIA does not include coke consumption by cement
plants in its figures.
Electric utilities in July burned 343,000st of petroleum
coke, which was the most since January and slightly higher
than July 2010.
From January through July of this year electric utilities
consumed 1.92mn st of coke, or 2.5pc down from the same
timeframe a year earlier.
Independent power producers (IPPs) burned 118,000st of
coke in July, which was the second-highest monthly volume
of 2011, but was down 29.3pc from July 2010. IPPs in the
first seven months of this year consumed 779,000st of petroleum coke, 18.8pc lower than the 959,000st burned in the
corresponding period in 2010.
Page 10 of 19
From January through July the industrial sector consumed

581,000st of coke, which was up 3,000st from the same timeframe in the year-earlier period.
Stocks of petroleum coke held by the electric power sector dropped to 540,000st at the end of July, which was down
sharply 48.6pc from 1.05mn st in July 2010. Stocks at the end
of June stood at 562,000st.
Electric utilities were holding 411,000st of petroleum coke at
the end of July, the lowest level of 2011, and down 55pc from
907,000st in the same month a year earlier.
Stocks held by IPPs at the end of July at 129,000st were
down from 130,000st a month earlier, and were down 13.4pc
from July 2010.
Japans coke imports rise in September

Japans imports of fuel grade petroleum coke rose 23.1pc
in September to 606,725mt from the same period of 2010,
according to the countrys customs data.
Japanese coke consumers including steel, cement and petrochemical makers increased purchases, as output at each sector
climbed in August from the corresponding month in 2010
which result in lower stocks levels.
Japans fuel grade petroleum coke imports
Sep 11
Aug 11
US
Sep 10
000 mt
Jan-Sep 11 Jan-Sep 10
523
337
323
3,172
3,122
Canada
71
46
157
410
385
Taiwan
35
Others
13
44
13
228
179
607
427
493
3,810
3,721
Total
Note: Numbers are rounded. Source: Ministry of Finance
Change in Japans fuel grade petroleum coke imports

100
00
50
61.9
55.2
42.2
23 1
23.1
0.0
0
-50
-100
-70.5
US
Others
Month pc change
Total
Year pc change
Energy Argus
Petroleum Coke
9 November 2011
Coke Market News
Most cargoes that arrived in September traded in August.

Imports from the US in September jumped by 62.1pc to
522,606mt from the year-earlier period. The rise more than offset a drop in Canadian supply to 71,303mt, down 54.6pc from
September 2010.
No tons were delivered from Taiwan in September, com-
pared with imports of 13,196mt from the country the previous

September.
Japans petroleum coke import costs in September rose to an
average of $210/mt, up 19.2pc from $176/mt a year earlier. The
price hike largely reflected higher import costs for competing
steam coal over the period.
Coker operations
US west coast
ConocoPhillips, Rodeo, California
A fire in a coke pit on the morning of 3 November at
ConocoPhillips 120,000 b/d refinery did not slow plant
operations, according to a spokeswoman for a local
authority. The fire was put out by refinery personnel
and did not involve any process or plant shutdowns.
Rocky Mountains
Sinclair Oil, Sinclair, Wyoming
Sinclairs 60,000 b/d refinery is running at reduced rates after suffering
separate fires in a crude unit and
vacuum unit early in September. The
extent of the damage is unclear.
US Midcontinent
CVR Energy, Coffeyville, Kansas
The facility will perform maintenance
on a coker, crude unit, a vacuum unit
and a hydrotreater at its 110,000 b/d
refinery starting in March 2012. Work
is expected to last about one month.
US west coast
Valero, Wilmington, California
Valero will begin four weeks of
scheduled maintenance on a
coker and crude unit in January.
US Gulf coast
Valero, Corpus Christi, Texas
Valero began a three-week turnaround at its 200,000 b/d refinery
around 21 October. The facility
is performing maintenance on a
coker and a crude unit..
US Gulf coast
Valero, St Charles, Louisiana
Valero will take a coker and
crude unit down in February for
10 weeks.
Caribbean
Hovensa, St Croix, US
Virgin Islands
Hovensa began two to
four weeks of planned
maintenance on a coker, a
crude unit and a reformer
in October.
Page 11 of 19
Venezuela
PdV, PetroAnzoategui
upgrader, Anzoategui state
PdV completely shut down the upgrader
on 21 September for major maintenance,
Venezuelas state-owned oil company
said. The company did not say how long
the upgrader would remain out of service.
Spain
Repsol-YPF, Puertollano
The company will conduct
coker maintenance at its
135,000 b/d refinery for
39 days during the fourth
quarter of 2011.
China
Sinopec, Shanghai
(Pudongs Gaoqiao area)
A fire, believed to have begun in a coking unit, swept
through the refinery on 23
September. The extent of
damage is unclear.
Energy Argus
Petroleum Coke
9 November 2011
Coke Industry News
Rio Tinto to spin off 13 aluminum assets

Global metals and mining company Rio Tinto will spin off
13 aluminum production assets worldwide, including bauxite mines and smelters, the company said on 16 October.
Rio Tintos plan follows a strategic review and will help the
company streamline its aluminum business. A new company,
Pacific Aluminium, will be created out of Rio Tintos interest
in several Australian properties and a smelting station in New
Zealand, effective from 16 October.
A second group of assets in France, Germany, the UK, and
the US, have been marked for divestiture but will continue
under Rio Tinto management while the company evaluates different sales opportunities, the company said.
Aluminum smelters are among the largest users of highgrade calcinable petroleum coke and also use coal to fire their
plants.
Wall Street analysts said the decision is in line with recent
management commentary. The company has not disclosed
the sale price it will seek for any of the affected properties. A
Deutsche Bank research note valued the properties at about
$8bn in total, and others said streamlining would allow Rio
Tintos aluminum group to focus on more-profitable Canadian
operations.
Other than Canada, Rio Tintos remaining aluminum operations will be the Yarwun and Queensland Alumina refineries
and the Weipa bauxite mine, all in Australia.
The strength of our balance sheet means that we can choose
the most opportune method and timing to divest these assets,
which may not occur until the economic climate improves, Rio
Tinto chief executive Tom Albanese said.
Pacific Aluminium will be made up of the New Zealand Aluminium Smelters plant and five assets in Australia: the Gove
bauxite mine and alumina refinery, Boyne Smelters and nearby
Gladstone Power Station, the Tomago smelter and the Bell Bay
smelter.
In France and Germany, Rio Tinto will look to spin off three
specialty alumina plants and the Gardanne refinery. The Lynemouth smelter and associated power station in the UK could
face closure, Rio Tinto said.
The Sebree smelter in the US state of Kentucky is also under
evaluation for a potential sale.
This move is a further significant step towards achieving our performance targets in the aluminum product group,
Albanese said.
PdV delays Jamaican refinery expansion

Venezuelas state-owned energy company PdV has delayed
by four years plans for a $1.3bn expansion of Jamaicas
sole Petrojam refinery, which would increase the islands
capacity by 25,000 b/d to total 55,000 b/d, Jamaican energy
ministry officials told Argus.
Petrojam is 49pc owned by PdV with Jamaican counterpart
PCJ holding the rest. The expansion is not scheduled in PdVs
near-term plans for investments in refineries, the officials
said. The Venezuelans are concentrating on new and expanded
refineries in Cuba, Central and South America, China and
Syria, one Jamaican official said.
The Petrojam expansion was originally scheduled to begin in
2009 but was postponed by then-Jamaican prime minister Bruce
Golding because of ballooning costs (EAPC, 6 January, 1010, p6).
The latest projection is for a 2015 start, with completion
2018, according to an energy ministry official. But this depends on agreement on the financial details.
Those include concluding a new ownership structure for
the 47-year-old refinery that will allow PdV and PCJ to obtain
financing, officials said. Venezuela and Jamaica are negotiating
a transfer of shares that would lift PdVs interest above 51pc.
This will allow financing for the expansion to be found without
a government guarantee that Jamaica cannot provide, they said.
Worldscale Association lifts bunker assessments

The bunker fuel prices that will be incorporated in the calculation of 2012 Worldscale flat rates have increased by 3038pc over 2011, the Worldscale Association has announced.
Bunker prices used in the annual freight flat rates are
based on an independent assessment of average worldwide
prices for 1 October 2010 to 30 September 2011.
Page 12 of 19
The assessed cost of 380cst bunker fuel has increased by

30pc from $467.48/mt to $606.56/mt.
Low sulfur 0.1pct sulfur bunker fuel costs have increased
by 38pc from $665.49/mt to $915.77/mt in 2012.
The cost of 1pc sulfur fuel has increased by 33pc from
$485.09/mt in 2011 to $642.74/mt next year.
Energy Argus
Petroleum Coke
9 November 2011
Coke Industry News
This change is part of a Jamaican government agreement

with the International Monetary Fund (IMF) to divest several
state assets as one of the conditions for IMF credits of $1.3bn,
the IMF said. As PdV makes new equity investments in the
refinery project, the Jamaican governments equity participation will continue to be reduced accordingly, the international
agency said.
Petrojam currently processes Venezuelan crude imported
under Caracas PetroCaribe energy program to produce LPG,
gasoline, kerosene, jet fuel, diesel, heavy fuel oil and asphalt.
The expansion would allow the production of a wider range
of refined products and provide petroleum coke for a 120MW
power station to be managed by the islands biggest power
producer, JPSCo.
Sinoway calcining plant progressing

Sinoway said the petroleum coke calcination plant being
built in Weifang, Shandong province, is progressing well.
Site preparation has commenced and foundations have been
laid.
The plant is scheduled to start the first heat-up steps in April
2012, with marketable grades of calcined petroleum coke being
produced by August.
Officially known as Sinoway Carbon, the new plant is owned

100pc by Hong Kong-based Sinoway Group. Sinoway explored
the feasibility of working with its unidentified Indian partner
on the project, but then found it more commercially viable not
to do so. The two companies, as a result, chose to stop going
forward as joint venture partners for the plant.
Sinoway vice president Alan Chui said the new plant in
China will set the standard for calciners around the world. The
plant will supply calcined petroleum coke for markets in Australia, the Middle East and other regions.
The plant is structured to be a major regional or even global
project, strategically based in China, Chui said. We are currently discussing potential involvement with some other prominent partners in the region, Chui said.
Sinoway is one of Chinas largest exporters of green petroleum coke for the aluminum industry. It acts as one of the major
traders dealing with exports of Chinese coke to the Middle East,
east Asia and North America.
Dry bulk fleet growth at peak levels

Dry bulk fleet growth has reached peak levels and will
remain elevated for the next 12 months, Sophocles Zoullas,
chief executive officer of Eagle Bulk Shipping, said.
Valero seeks heavy crude partner for Aruba

US independent refiner Valero is considering strategic
alternatives for its 280,000 b/d refinery in Aruba, including the possibility of taking on a partner to help improve
heavy crude processing at the facility, as it focuses on
feedstock production for US Gulf coast refineries, company officials said on 1 November.
Valero has restarted a process of looking for strategic
alternatives for Aruba, the company told analysts while
discussing quarterly financial results.
Projects to reduce costs at the site are under way, Klesse
said without elaborating on what those projects are, how
much they cost or when they would be complete.
Valero chief Bill Klesse said the refinery would generate
feedstocks for its conversion operations along the US Gulf
coast, where the company recently bulked up capacity with
the purchase of a 135,000 b/d refinery in Meraux, Louisiana,
from Murphy Oil.
Page 13 of 19
Valero is still considering where it will do hydrotreating a process that removes sulfur impurities from process
streams, according to Klesse. But Aruba is better suited for
Valeros purposes to act as the front-end of a refinery, he
said.
The facts are, were still very interested in finding a
partner or some relationship that allows us to process very
sour, heavy crude or high tan crude, which the refinery can
do, Klesse said.
Valero has sought such a partner for more than a year. A
narrowing price differential between heavy and light crude
in 2009 pushed Valero to temporarily shutter the facility in
July of that year.
The rewidening of that spread led the company to reopen
the refinery late last year albeit at reduced run rates but
Valero said at the time it would be a more valuable facility
to a partner with heavy crude reserves.
Energy Argus
Petroleum Coke
9 November 2011
Coke Industry News
Fleet supply grew rapidly this year, up 14.3pc from the same
period a year ago. Capesizes have represented 50pc of those
new deliveries, Zoullas said in discussing the companys thirdquarter earnings.
But new orders are down 80pc from 2010 and the current
orderbook stands at 39pc of the fleet compared with the 51pc of
the fleet that has prevailed since 2008.
Zoullas said Chinas transportation ministry has pledged to
curtail newbulding output to bring fleet supply back into balance.
The massive volumes of new vessels entering the fleet this
year pressured dry bulk rates in the third quarter as the market
struggles to soak up the excess supply. Although Capesize rates
rallied in August, Zoullas viewed that as representing a dislocation in fleet distribution rather than strong demand overcoming
supply.
Supramax rates have outpaced other vessel types, averaging $14,500/d this year and staying above break-even costs
of $11,000/d for Eagle Bulk. Panamax rates have averaged
$13,700/d and Capesizes $13,300/d.
Zoullas said the dry bulk market outlook is mixed. Japanese
reconstruction efforts following Marchs earthquake and tsunami could start to benefit trade in coal, iron ore, steel products and lumber, although so far there have not been signs of
increased Japanese demand.
Indias iron ore production ban is expected to be lifted by
December, which Zoullas hopes could lead to a full resumption
in exports to 2010 levels. The loss of that supply has affected
Supramax trade this year.
A weak US corn crop is expected for the 2011-2012 season,
which will lead to a reduction in seaborne supplies, but that will
be offset by production from the former Soviet Union or Latin
America, where grain is in storage.
China raises tax on coking coal sales

China raised the resource tax on coking coal from 1 November in a move that could hit earnings of coal producers.
The Chinese government said on 10 October that it would increase the sales tax on coking coal to 8-20 yuan/mt ($1.25-3.15/
mt) from the current Yn0.3-5/mt.
But coking coal will continue to be taxed on volume, unlike
oil and gas that will as of next month be taxed based on value.
The tax on other types of coal including thermal coal will remain at Yn0.3-5/mt.
The higher tax is likely to affect profit margins at major
Chinese coal producers such as Shenhua Energy, Yanzhou Coal
and China Coal.
But the new tariff will work out to be much lower than
market expectations of a 3-5pc tax based on value. Coking coal
is selling at Yn1,980/mt in north China, meaning a Yn20/mt tax
would only be around 1pc of sales value.
The move to increase the tax is motivated by the scarcity of
resources and is not an attempt by local governments to collect
more revenue, analysts said.
The tax will benefit local governments, rather than be collected by Beijing. The decision to increase the tax could also
reflect confidence on the governments part that inflation is
under control.
The new tax is an extension of a pilot program implemented
in 12 western Chinese provinces last year.
Plans to implement a resource tax nationwide have been
postponed twice in recent years because of inflationary
pressures in 2007 and concerns over the impact of the global
economic downturn in 2008.
Petrobras would veto sale of refinery stake

Brazilian state-controlled oil company Petrobras would
veto the possible sale of Venezuelan state-owned oil
company PdVs 40pc stake in the 230,000 b/d Abreu e
Lima refinery that is under construction, a Petrobras
official said at the end of October.
Petrobras downstream director Paulo Roberto da Costa
was responding to China Development Banks recent
agreement to provide guarantees for 75pc of PdVs costs
for the refinery in the northeastern Brazilian state of Pernambuco, enabling the company to obtain financing with
Page 14 of 19
Brazils BNDES development bank. Becauase of a lack

of adequate financial guarantees, PdV has been forced
to request a series of extensions from Petrobras in recent
months.
Petrobras has forged ahead on its own with the project,
which is scheduled to come on stream in 2013.
Petrobras and PdV have a long record of aborted deals.
For instance, Petrobras pulled out of a preliminary agreement to develop a slice of Venezuelas Orinoco heavy oil
belt in conjunction with PdV in 2008.
Energy Argus
Petroleum Coke
9 November 2011
Coke Industry News
Refiners contend with low margins

Refiners will have to learn to adapt to extended periods
of low profitability and high price volatility, oil industry
experts predict.
Refining margins have plunged from the highs of pre-economic crisis levels in 2008 and are unlikely to recover soon,
amid persistent economic uncertainty and refining capacity
growth, said presenters at the Downstream Asia section of the
Singapore International Energy Week
Addition of distillates production capacity in particular,
including jet fuel and diesel, is unlikely to slow until after 2016
at least, said Tan Koon Tee, a senior adviser at consultancy McKinsey. Around 1.9mn b/d of distillates capacity will be added
globally each year from 2012 to 2014, while another 2.1mn b/d
will be added in 2015, Tan said. The continual capacity addition
will likely prolong the downturn in refinery margins that the

industry faces, Tan said.
High price volatility has also made an already difficult business environment more challenging, said Wijnand Moonen,
a director at UK-based standards assessor Lloyds Register
Group. Refiners will have to learn to operate profitably at low
rates of 50-60pc. At the same time, they must be ready to ramp
up run rates when demand rebounds, Moonen suggested. This
will require refinery process engineers to challenge the conventional view that a refinery typically has to run at a minimum
80-90pc, Moonen said.
Refineries are also considering fuller integration with the
downstream sectors to combat an environment of low refining
margins, said Bhawana Suphavilai, president of Thailands PTT
Energy Solutions. She cited the examples of Indian privatesector refiner Reliance Industries and PTT Global Chemical,
Kinder Morgan to ramp up coal handling capacity

Kinder Morgan is significantly expanding its terminal
capacity, largely in response to strong export demand
which drove up third-quarter coal volumes for the company by 23pc from last year, chief executive Rich Kinder
said on 19 October.
Total coal volumes handled by the US midstream operator
rose to 10.39mn st in the third quarter, up more than 1.9mn
st from the year-ago quarter, Kinder Morgan spokesman Joe
Hollier told Argus.
Kinder said the company remains on track to spend more
than $500mn over the next couple of years to expand coalhandling facilities, primarily for the export market.
It looks like we are going to hit that number very
squarely, and maybe even do a little better than we thought,
he said.
He provided a partial breakdown of the spending plans,
saying the company expected to enter into additional contracts in the fourth quarter which are likely to result in over
$200mn of additional capital expenditure on coal handling
facilities.
He did not provide details of the pending contracts, but
said much of the growth in the companys terminals business
is being led by higher export coal volumes at Pier IX in
Virginia and at our bulk facilities in Houston.
He also said Kinder Morgan and partner American Electric Power had already agreed to invest $111mn to expand
Page 15 of 19
and upgrade the International Marine Terminal (IMT) in

Louisiana to handle more export and domestic-bound coal.
Earlier this month, Kinder Morgan entered into a longterm agreement with Progress Energy Florida to handle up to
4mn st/yr at IMT, where the generator will lease space for its
domestic coal purchases.
The agreement at the terminal south of New Orleans, on
the Mississippi River, takes effect in 2013 for 10 years. But
there is an option to extend it for up to 20 years. Progress
has said this will give it more flexibility in fuel sourcing
because barge deliveries from Central Appalachia and the
Illinois basin can be stored at the terminal. After that they
can be shipped across the Gulf of Mexico, when needed, to
Progress Crystal River power plant in Florida.
Earlier this year, Kinder Morgan signed a separate
agreement with Massey Energy, now part of Alpha Natural
Resources, to handle a minimum of 4mn st/yr at IMT. It
also agreed to handle 2.2mn st/yr for an unidentified large
Colorado producer at its Houston terminal, where it started
receiving coal in June.
These deals, and plans to acquire new coal export facilities, should bolster Kinder Morgans terminals business
one of five business segments. The company is poised to
become the nations fourth-largest energy company and the
largest midstream company after announcing that it plans to
pay $21bn and take on $17bn in debt to buy rival El Paso.
Energy Argus
Petroleum Coke
9 November 2011
Coke Industry News
which both have refining capacities integrated with downstream

petrochemicals production.
PTT Global Chemical was formed late last month after the
merger of PTT Chemical (PTTCH) and PTT Aromatics and Refining. The new entity will have a refining capacity of 228,000
b/d and a petrochemicals production capacity of 22,630 mt/yr.
The merger will save state-controlled oil company PTT at least
$40mn-48mn a year, said a PTTCH report earlier this year.
China coal imports hit record high

Total Chinese coal imports hit an all-time high of 19.11mn
mt in September, as winter restocking took place earlier
than expected, bringing year-to-date total imports to 124mn
mt, according to customs data.
Chinese utilities had begun stockpiling coal ahead of a
scheduled 20-day maintenance on the Daqin railway, which
links the coal-producing hub of Datong to Qinhuangdao port.
Septembers total coal imports comprise 3.26mn mt of
anthracite, 3.89mn mt of coking coal, 6.87mn mt of non-coking
bituminous coal and 5.09mn mt of other coal.
Non-coking bituminous coal imports from South Africa

stood at 1.62mn mt or roughly 11 capesize vessels in September, up from 1.16mn mt in August. Before August, the last time
such product from South African had surpassed the 1mn t mark
was in November last year.
Australian imports of non-coking bituminous material stood
at 1.95mn mt, up from Augusts 1.67mn mt.
China also imported 470,000mt or about three capesize vessels of such coal from Colombia in September, marking the first
time in nine months that Colombian material was priced into the
country.
The record imports were largely attributed to sellers lowering coal prices to sell into China because of weak demand in the
rest of the region. Everything is trading to a cfr China netback
because they are the only ones buying, a Singapore-based
trader said.
But high stockpiles at domestic plants, rising international
freight costs and a grim economic outlook have curbed Chinese
interest in imported coal. Chinese buyers also failed to return to
the market in force after the 1-7 October Golden Week holiday,
prompting talk among market participants that the Chinese peak
winter buying period may be over.
Argus Coal Transportation

Buying the coal is less than half the job.
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THIS WEEK: EASTERN FOCUS
Coal Transportation
NORTH AMERICAN TRANSPORTATION NEWS & ANALYSIS
Eastern US rail rates

January rates
$/st
Rate
Change
Pc change
Central Appalachia to:

East Coast Export Terminals
33.25
0.00
0.0%
Carolinas
30.00
0.00
0.0%
Cinergy
17.90
0.15
0.8%
Florida
30.65
-0.15
-0.5%
New York
24.15
0.00
0.0%
Southern
25.80
TVA
0.00
0.0%
23.55
0.00
0.0%
Florida
33.00
-0.25
-0.8%
New York
22.05
0.00
0.0%
East Coast Export Terminals
30.50
-0.50
-1.6%
Cinergy
13.20
0.00
Illinois Basin
11.35
0.00
Pittsburgh Seam:
Illinois Basin:
0.0%
0.0%
Eastern US rail rates plus fuel surcharges

Effective month of Feb 2011 Current Month
Prior Month
$/st
Pc change
Exports hot into 2011

Eastern US railroads enter 2011 with significant coal
export growth potential as heavy rains and floods backlog shipments out of competing regions, but at home US
railroads will continue to see shale gas pressure rail rates
and demand for coal.
Norfolk Southern (NS) and CSX showed flexibility on
rates to facilitate thermal coal exports late last year, but with
international coal prices into Europe spiking to $130/metric
tonne, US exporters are having an easier time making the
economics work into Europe.
The capacity is still there: Kinder Morgans Pier IX
finished at less than 7mn short tons shipped to domestic and
export destinations in 2010, well short of its 10.5mn st/yr
capacity; and NS Lamberts Point at approximately 16.6mn
st for the year has room to grow to 18mn st but even further
to 40mn st if NS adds shifts at the terminal. Dominion Terminal Associates is running full out, finishing at 14mn st for
export and domestic coal movements in 2010.
Central Appalachia to:

East Coast export terminals
34.47
34.35
Continued on page 2
+0.3%
Carolinas
31.22
31.10
+0.4%
Cinergy
18.69
18.47
+1.2%
Florida
34.00
33.84
+0.5%
New York
25.72
25.57
+0.6%
Southern
28.24
28.01
+0.8%
TVA
26.06
25.83
+0.9%
Pitt Seam to:

Florida
36.66
36.56
+0.3%
New York
23.51
23.38
+0.6%
East Coast export terminals
31.41
31.83
-1.3%
Cinergy
14.11
14.03
+0.6%
Illinois Basin
11.62
11.60
+0.2%
Illinois Basin to:
Note: Based on CSX fuel surcharge; Est. 105st/car.
Eastern coal originations, current over year-ago

16,000
8,000
0
-8,000
-16,000
-24,000
15
21
27
33
39
45
Week
51
Source: AAR
Executive briefing
Eastern US railroads will see stronger export coal
Physical coal markets strong at end of 2010
demand this year from international buyers seek-
Mississippi utility challenges NS coal rates
ing alternatives to flooded-out Australian product,
STB takes main stage for 2011 regulatory debates
ahead of US domestic steam demand strengthening
International markets to pull on US coals in 2011
later in the year as utility stockpiles continue to fall.
STB 2009 Waybill sample coal rates
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NEXT WEEK: WESTERN FOCUS
Argus Media Ltd 2011
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Page 16 of 19
Volume 30, 1, 4 January 2011
www.argusmedia.com
Energy Argus
Petroleum Coke
9 November 2011
Energy Market Overview

Nymex WTI vs Maya USGC
$/bl
US asphalt prices
$/mt
650
120
590
105
530
90
470
75
60
Nov-10
410
Feb-11
May-11
WTI
Aug-11
Nov-11
350
Nov-10
Feb-11
New Jersey
Maya
May-11
East Gulf coast
Aug-11
Nov-11
West Gulf coast
Coal Markets
Crude Markets
Concerns about Europes financial health and moderating economic activity in China pushed global steam coal
markets lower in October.
The declines were particularly sharp for Atlantic basin
markets.
High coal inventories at European terminals and struggles
on the part of EU leaders to form a concrete plan for addressing the regions debt woes together reduced delivered
coal prices at the Amsterdam-Rotterdam-Antwerp (ARA)
hub.
Coal CIF ARA within 90 days averaged $117.69/mt in
October, down 4.6pc from $123.39/mt on average in September.
Prices also slipped at the Richards Bay coal terminal in
South Africa, the shipping point for coal heading to Europe
and Asia.
The API 4 index for coal FOB Richards Bay averaged
$110.68/mt last month, falling 4.2pc from $115.49/mt in
September.
Signs of less-robust economic expansion in China and a
spillover of the bearish market sentiment in Europe dragged
on Asia-Pacific coal prices as well. South China steam coal
fell to an average $116.50 CFR last month from $117.04/mt
in September.
In Australia, API 6 prices at Newcastle meanwhile fell to
$118.79/mt on average from $122.04/mt a month earlier.
US domestic prices were mixed. Prompt-quarter Powder
River basin 8,800 Btu/lb coal averaged higher while more
export-exposed Central Appalachian coal with 12,500 Btu/lb
and 1.6lb SO2/mmBtu shed around 50/short ton at $75.83/
st FOB mine.
Outright crude oil prices were relatively stable for a second consecutive month, gaining just 82/bl from September to reach an average of $86.43/bl during October.
Crude prices edged higher on the back of signs that Europe
was trying to take measures to prevent a recession as a result
of debt issues. But gains were limited as production increased
out of Libya, Nigeria and the North Sea during the month just
as European refiners went into their seasonal maintenance
period.
The sweet/sour spread in the US widened by $1.45/bl on
average from just under $3/bl in September to around $4.35/
bl in October as Light Louisiana Sweet (LLS) crude continued to strengthen.
At the same time, poor refining margins for some of the
heavier grades weighed on their values. LLS firmed as supplies of lighter grades diminished following the end of the
release of more than 30mn bl of light sweet crude oil from
the Strategic Petroleum Reserve.
The spread between sweet and sour grades in Europe narrowed by 45/bl from around $2.85/bl in September to close
to $2.40/bl in October.
Poor naphtha and gasoline margins were pressuring lighter
grades at a time when Libyan production of those crudes was
also seen increasing.
Meanwhile, heavy Russian Urals found support from
strong refining margins and a transatlantic arbitrage in which
volumes left the region during the month.
The west African sweet/sour spread narrowed sharply,
moving in about $2/bl from an average of close to $6.10/
bl in September to just more than $4.05/bl during October.
The spread narrowed as demand for sour Angolan grades
Page 17 of 19
Energy Argus
Petroleum Coke
9 November 2011
remained healthy out of Asia, where a tight fuel oil market

and Japanese utility demand for direct-burning crude supported values for the heavier grades. Light Nigerian crude
found healthy demand out of India but this was countered by
relatively poor demand from the US.
US Clean Product Markets

US clean products prices weakened, opening arbitrage opportunities to South America and Europe.
The Gulf coast remained well-supplied with gasoline and
diesel, as ongoing allocations on the Colonial Pipeline kept
prompt supplies in place instead of moving to the east coast.
Diesel shipments to Europe were steady out of the Gulf coast,
while the Gulf coast and west coast exported finished gasoline
to Mexico.
Europe exported finished and unfinished gasoline to the east
coast, which continued to face a shrinking refining complex
with the pending closure of another refinery, ConocoPhillips
plant at Trainer, Pennsylvania, as well as pending closures of
Sunocos Philadelphia and Marcus Hook refineries.
US Fuel Oil Markets

High-sulphur fuel oil margins at the Gulf coast weakened,
after hitting a more than three-month high relative to sour
crude in mid-October.
Atlantic coast 0.3pc sulphur high-pour values have been at
a premium to 0.3pc sulphur low-pour prices since mid-August,
in contrast to the more typical spread that has high-pour at a
discount to low-pour. The spread between Atlantic coast 1pc

sulphur fuel oil and Gulf coast 3pc fuel oil flattened during the
month, erasing a typical premium for the lower-sulphur qualities.
Spot activity in the Atlantic coast fuel oil market remained
subdued amid limited buying interest as a result of thin end-user
consumption.
The arrival of cooler weather did little to stimulate the usage
of fuel oil commercially or by electric utilities.
Activity in the Gulf coast high-sulphur market increased as
the month went on, as traders acquired tons to move to Singapore and Latin America.
EU Emissions Markets
The EU emissions trading scheme (ETS) allowance market posted further losses in October, as the market stayed
closely aligned with the equities market.
The December 2011 allowance contract weakened over the
month, with a 3.76pc decrease from the end of September to 24
October. Prices started the month at 10.89/mt CO2 equivalent
(CO2e), but fell to 10.48/mt CO2e by 24 October.
The clean-dark spread widened over the month. The German
calendar 2012 clean-dark spread reached 14.01/MWh by midmonth, its highest since November 2009.
The increasing profit margin for burning coal has been a
bullish factor for the allowance market. But it has been outweighed by many bearish factors, especially the grim macroeconomic outlook for the EU.
Faltering confidence in a solution to the eurozone debt crisis
substantially weighed on markets, as EU summits spent time
in formulating a comprehensive rescue plan. But the EU 17 approved a package to solve Europes debt crisis on 26 October.
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Energy Argus
Petroleum Coke
9 November 2011
US Emissions Markets
Trade in the Cross-State Air Pollution Rule markets was
light through the month, after the US Environmental Protection Agency (EPA) proposed changes that would increase
the allowance budgets for several states.
The first trades for vintage 2012 group 2 SO2 allowances
were reported early in the month. Prices dipped to $600/mt
before recovering to close the month at $900/mt.
No trades were reported for vintage 2012 group 1 SO2 allowances, but prices followed group 2 lower early in the month
before climbing back to end at $900/mt.
Activity in the Cross-State Air Pollution Rule ozone season
NOx market picked up through the month, with vintage 2012
trading as high as $2,250/mt on 5 October. The vintage was last
reported to trade at $1,700/mt on 25 October.
Vintage 2012 cross-state annual NOx prices lost $500/mt in
subdued trading to reach $1,900/mt by 25 October.
ARGUS INDEX METHODOLOGY

Argus is the publisher of Argus Coal Daily and Argus Coal
Daily International, the accepted benchmarks for trade in the
US and international markets for coal, and Argus Air Daily, the
index for sulphur allowance trading. Argus publishes numerous
price reports and analytical newsletters, and is widely used as
an index for trade in crude oil, refined products, and LPG.
Energy Argus Petroleum Coke brings our experience in
market analysis and indexing to an important but often
neglected corner of the industry. Our goal is to produce
index-quality assessments of the coke market, and to analyze
coke prices and their direction. Argus is uniquely able to
provide market news and analysis from its global team of
reporters covering related industries such as coal, crude, gas,
power and refining.
Our coke indices assess spot market values for coke which
is a great challenge in an elusive and illiquid market. We are
assessing the value that coke has traded at or would trade at
during the most recent month, for delivery in the next 90 days.
We are not assessing long term contracts, nor are we
including prices that were transacted months ago and are now
being delivered. The prompt value of a commodity is always
the best index.
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Petroleum Coke
is published by Argus Media Inc.
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Energy Argus

Petroleum Coke Market Prices, News and Analysis

Argus fuel-grade petroleum coke spot

Coke Market Overview

Fob US Gulf Coast

Delivered Northwest Europe - ARA

Delivered Spanish Mediterranean

Coke markets weaken, flurry of deals done

Coke and coal freight rates

Puerto Bolivar to ARA

Puerto Bolivar to USGC

Puerto Bolivar to USEC

Fob US West Coast

Supramax (45-50,000 dwt)

Handymax Coal (up to

US: Coke exports still up on year

Rio Tinto to spin off 13 aluminum assets

Dry bulk fleet growth at peak levels

Copyright 2011 Argus Media Ltd

US Gulf Coast hard coke spot price

Coke Market Overview

US West Coast hard coke spot price

Coke pc of coal delivered NW Europe

Coke pc of coal delivered Spanish Med

A US Gulf coast producer, when asked if coke prices were

Western Mediterranean Cinergy (Ohio barge)

Copyright 2011 Argus Media Ltd

US coke export freight

Coke Market Overview

Delivered coke and coal in NW Europe

A 50,000mt cargo of 6pc sulphur coke from the US was due to

cif ARA 6,000 kcal

fob Richards Bay

cif Japan 6,700 kcal

CSX 1pc Sulphur US Rail

Big Sandy 1pc Sulphur US Barge

11,500 Btu 5.0 lbs SO2/mmBtu

Coke and coal freight into NW Europe

FOB New Orleans

FOB Hampton Roads

Richards Bay Coal

USGC LLS crude oil refinery margins

US SO2 Allowances ($/st)

US NOx Allowances ($/st)

Argus European CO2 Index (/t CO2e)

Crude and refined products

Maya US Gulf Coast

ANS US West Coast

3pc Fuel Oil USGC

Asphalt, Western Gulf Coast ($/st)

USGC Refining Margin (3:2:1)

Copyright 2011 Argus Media Ltd

US refinery utilization five-year range

Coke Market Overview

USGC coal implied coke forward curve

CIF ARA coal limplied coke forward curve

Copyright 2011 Argus Media Ltd

Coke Market Overview

market transportation rates. Trading interest even slowed for US

ConocoPhillips is set to bring the new 65,000 b/d coking unit

Petroleum coke price snapshot

Fob US Gulf Coast

Delivered Northwest Europe - ARA

Fob US West Coast