Notwithstanding the Indian government’s proposed nationwide restriction on industrial usage of petroleum coke, import offers for the ‘polluting’ fuel have gone up this week, increasing the overall raw material costs for cement players.
Pet coke, an oil refinery by-product is preferred as a low-cost feedstock to fuel the cement manufacturing process because of its higher energy content than coal, but it releases larger amounts of carbon dioxide and sulfur dioxide.
Amid the ongoing rally in global crude oil prices, a sharp increase in the prices of pet coke has jeopardized the operating margins of cement majors. Reportedly, UltraTech Cement’s ebitda margins shrunk to 18.9% from 19.32% in the three months of Jan-Mar’18 (Q4FY18).
Given the level at which pet coke is currently trading combined with the possible sustainability of such elevated prices, several cement plants have already been switching to U.S. or domestic coal.
PRICING TREND
The latest offers for pet coke (6.5% sulfur) from USA are assessed at around USD 115/MT CNF India, higher by USD 7/MT over the previous week’s rates; while offers for pet coke (9% sulfur) from Saudi Arabia are assessed up by USD 6/MT to around USD 111/MT CNF India.
Source: CoalMint Research
The current domestic prices of pet coke are INR 9,450/MT (Reliance Industries Ltd.) and INR 8,280/MT (Mangalore Refinery and Petrochemicals Ltd.).
N.B.:
i. The above prices are effective 1 Jun’18.
ii. These prices are exclusive of GST @18%.
iii. The MRPL price is for pet coke transported by rake/barge.
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