LEXINGTON, Mass., Sept. 17, 2001 DRI-WEFA, Inc., a subsidiary of privately held Global Insight, Inc., today announced the release of its new study of petroleum coke markets by the DRI-WEFA Energy Group. John Dean, consulting vice president for Coal Markets at DRI-WEFA, directed the market assessment. Major conclusions of this new study include:
Sparked by both growing supply and increased interest from the market, petroleum coke is shedding its historic status as a “niche fuel” and is emerging as a major fuel option for fuel buyers and strategic energy planners.
As refineries ramp up their production of this “byproduct,” suppliers and traders will be aggressively marketing this high BTU energy source to gain a solid foothold in a power industry rocked over the past year by high prices for coal and natural gas.
A growing market for petroleum coke is buttressed by the convergence of a growing demand for affordable electricity generation and the rapidly expanding installation of new technologies such as fluidized bed units capable of fully taking advantage of this “opportunity fuel.”
Petroleum coke prices have peaked and will continue to slide from their recent highs through 2005. Prices will stabilize over the longer term in real dollars, in the $15-$17 range for 4% sulfur, 50 HGI Gulf Coast, as significant increases in capacity are met in large part by growth in global demand.
John Dean, consulting vice president of DRI-WEFA Energy Group and author of the study of petroleum coke markets stated, “The price of petroleum coke is already starting to subside, as shown by DRI-WEFA’s tracking of the benchmark 4% sulfur, Gulf Coast, 50 HGI petroleum coke.”
DRI-WEFA expects a further decline in price, driven by scheduled expansions of refinery coking capacity. Refinery coking capacity is set to skyrocket over the next five years as refiners work to get higher volumes of lighter distillates out of increasingly heavy crudes. As a result, petroleum coke output should increase as well, keeping a lid on prices as this additional supply seeks markets.
Dean continued, “Longer term, a growing stringency in SO2 standards worldwide will favor the use of desulfurization equipment.” As desulfurization equipment is installed, petroleum coke’s usage will increase due to its higher heat rate and its price competitiveness with coal. He concluded, “This cumulative impact on demand will begin to reach a significant level sometime close to 2007 and extend well into the future.”
DRI-WEFA, (www.dri-wefa.com), a subsidiary of privately held Global Insight, Inc., provides the most comprehensive coverage of countries, regions and industries available from any source. DRI-WEFA brings a common analytical framework and a consistent set of assumptions to its extensive capabilities and products. DRI-WEFA also provides a broad range of consulting capabilities covering market analysis, business planning, investment strategy, risk assessment, infrastructure analysis, policy evaluation, and economic development. The company has over 3,000 clients in industry, finance and government around the world with $70 million in revenues, over 500 employees and 30 offices covering North and South America, Europe, Africa, the Middle East and Asia.