China’s tariff retaliation against US to hit petcoke trade, raise prices

China's retaliatory tariffs(opens in a new tab) against the US are expected to hit bilateral petroleum coke trade as the former searches for alternative sources to sustain its growing battery material production.

The growing tariff spat(opens in a new tab) between China and the US has accelerated Beijing's search for alternative petcoke supplies and boost domestic capacity, sources said April 8.

The other key suppliers of low-sulfur petcoke are the UK and Brazil, while Russia, Venezuela and Saudi Arabia are top suppliers of high-sulfur petcoke.

Higher tariffs would lead to higher import costs and push up both petcoke and needle coke prices in China, the sources said.

Higher petcoke or needle coke prices pass on to anode materials producers with a lag, but the impact is visible when costs are realized.

Chinese anode material producers slowed down output in March due to a surge in petcoke and needle coke prices from mid-February, sources said. A slowdown in Chinese refining operations and increasing material demand from sectors like anodes pushed up low sulfur petcoke and needle coke prices at the time.

Petcoke and needle coke are raw materials derived mostly from petroleum residue and are used to create the anode part of batteries for electric vehicles or energy storage systems. Buyers prefer low-sulfur petcoke over needle coke for anode material production as needle coke prices are typically higher.

Global anode materials output is expected to reach 2.63 million mt in 2025, up 21% from 2024, according to Chinese research agency ICCSINO. The ratio of artificial anode materials is expected to reach 89% in 2025, equating to 3.2 million mt of petcoke requirement.

Tariff fiasco

China's retaliatory tariffs now raise duties on US petcoke imports to 37%, including a previously-imposed 3% tariff, said a China-based needle coke supplier.

China's petcoke buyers experienced a higher tariff regime during US President Donald Trump's previous term, which weighed on bilateral trade.

China's import tariffs on US petcoke hit 33% in September 2019, adding up from a 25% retaliatory tariff placed in 2018 and 5% in 2019, all to counter the US' tariffs on Chinese goods.

That led to a big drop in China's petcoke imports from the US. Shipments from the US dropped 24.4% year on year to 2.67 million mt in 2019, according to China's customs data.

China eventually slashed the 30% tariffs on US petcoke in March 2020 and imports went up.

China imported about 3.87 million mt of petcoke from the US in 2024, accounting for 28.5% of the country's total imports, according to customs data. More than 25% of China's petcoke demand is met via imports.

But China's recent retaliation has left domestic petcoke markets in a lurch.

Higher tariffs would result in higher costs for Chinese consumers, which could dent demand for imported material from the US, sources said.

Petcoke imports will suffer an additional blow due to tariffs as more domestic crude oil refiners start maintenance activities, which would reduce local supply, said another China-based source.

The US still remains the largest petcoke supplier to China, despite a decline in imports from 2023.

Spillover in needle coke

China also needs an alternative for imported low-sulfur petcoke such as needle coke as anode demand is set to rise at a time of tight domestic supply conditions, according to sources.

Several industries consume anode, including graphite electrode and prebaked anode sectors.

A combination of tariff spat and rising maintenance at Chinese crude oil refiners are expected to reduce domestic petcoke supply in China and push up prices, some China-based sources said.

It could create a knock-on effect on domestic needle coke prices, which usually move along with low-sulfur petcoke prices, they said.

Platts, part of S&P Global Commodity Insights, assessed uncalcined needle coke with a maximum of 0.5% sulfur at Yuan 6,350/mt ($865/mt) DDP Qingdao April 8, up 21% since February. Platts considers needle coke with a maximum of 5% moisture, a minimum of 1.35 g/cu cm true density, a maximum of 0.1% ash and 4%-7% volatile matter in its assessments.