Koppers Holdings Inc. has announced the completion of construction and commissioning of their 300,000 metric ton capacity tar distillation plant for its new 30% owned joint venture in Hebei Province. They have also announced the completion of a project to expand the capacity of its existing 60% owned tar distillation plant in Tangshan, from 150,000 metric tons to 200,000 metric tons.
Koppers has been working in and with China for as long as I can remember. This announcement is surely a great relief for them, as the project has been a long time in planning and execution, and not without its headaches. The recent downturn in the must have also caused some hearts to flutter.
It is important to remember the relative positioning of this plant in the Chinese market context. The majority of Chinese smelters are using soft or modified pitch. This plant will produce hard pitch. It is therefore not likely to influence the price point inside the domestic market.
Total capacity in China for hard pitch was around 1.45 million tonnes, so this announcement takes the supply side of the equation up by 24%. This is where the plant will have the real influence. Again, I don’t see this capacity increase will cause a drop in the market price. I think it is more likely that Koppers has a longer view in mind. With new smelting capacity in South East Asia, India and the Middle East, and with their Australian plant unable to grow any further, Koppers needed to put a stake in the ground. To be a strategic supplier of choice to the industry, Koppers needed to back themselves with a significant capacity increase, and where better to do so than in a country which produces large amounts of coal tar. In the event that the Chinese aluminium industry upgrades its pitch usage to vacuum distilled pitch, that will only be an advantage for Koppers.
Certainly the market showed little response to the announcement, with CTP prices in China remaining unchanged.