Alcoa has announced it has signed a letter of intent with Weifang Lianxing Carbon in Shandong province for a joint venture in calcined coke production. Lianxing produces about 300,000T of calcined coke per year, drawing most of its green coke from local independent refineries.
The plan is apparently for Alcoa take to take control of the sales of the calcined coke from the existing plant, as well as from future expansions. Alcoa purchases mainly from USA based producers, but takes a strategic slice from China. The announcement does not name specific destinations for the coke, but presumably Australia would be high on the list.
We understand that until recently, Lianxing’s sales were mostly to the domestic market, with some export sales to India, Japan and Korea. That has changed due to the cut backs in domestic aluminium production, which have been particularly severe in Shandong province. Lianxing has recently idled part of its production, leaving just enough capacity to meet export sales.
Lianxing is not associated with either of the major green coke suppliers (Sinopec and CNPC), which is why they purchase from local refineries. That means a higher degree of variability in crude and coke properties, which is bad news for smelters. As well, the cost of calcined coke is not in the calcining, but in the green coke itself, which is outside the control of either of the JV partners. It will be interesting to see how this project unfolds.
Since this project is of strategic importance and interest to our clients/subscribers, we will continue to monitor and report developments as they occur.