India’s major petroleum coke producing companies have mostly rolled over their prices, if not reduced during the first quarter of this fiscal year (Apr-Jun’20); while there has been no price increase by any refinery reflecting subdued demand due to the ongoing Covid-19 pandemic.
Pricing Commentaries
Reliance Industries’ (RIL) pet coke price is largely accepted as reference by Indian suppliers. It is also considered as a benchmark by leading cement manufacturing companies which constitute the majority of the country’s pet coke consumers.
RIL is by far the largest producer of pet coke in India, contributing almost 50% share of the country’s production. In the last year, however, a major portion of the company’s production was self consumed for their newly commissioned gasification units. A total of 10 gasifiers were successfully operationalized in a staggered manner over the last year. This has resulted in comparatively lower availability of pet coke from RIL for sale in the domestic market.
Conceptually, RIL price is linked to landed prices of imported pet coke in West Coast India. India’s major source of imported pet coke is USA with 6.5% sulfur content material and Saudi Arabia with 9% sulfur content. It is understood from market participants that logistical factors and marketing conditions are also considered by pet coke suppliers to determine the product’s pricing.
Indian domestic pet coke producers declare their prices on different dates. It has been observed that while RIL, Nayara Energy, and MRPL declare prices on the 1st of every month, IOC and HMEL declare prices after a lag of about 5-10 days, possibly to evaluate and respond to the price quoted by RIL into their pricing methodologies besides other factors.
India’s third largest pet coke producing company, Nayara Energy (erstwhile Essar Oil), having their refinery at Vadinar near to RIL’s refinery at Jamnagar, maintains its price within a nominal variation of up to INR 10/t with respect to the RIL price.
IndianOil’s pet coke pricing for its Koyali and Panipat refineries are based on logistics from ports across the West Coast of India. These refineries consider different logistical costs besides prevailing local marketing conditions. On the other hand, Paradip and Haldia refineries are linked to import parity price in East Coast of India.
Mangalore Refinery and Petrochemicals Ltd. (MRPL) also considers local marketing factors as a vital element for pricing. The company mainly caters to the end-user markets in the states of Karnataka, Tamil Nadu and Andhra Pradesh. Marketing conditions for MRPL are quite different as compared to RIL and Nayara Energy in Gujarat. The refineries of the major pet coke producing companies are located in different geographies spanning the north, west, south and eastern parts of India.
Notably, pet coke price of Nayara Energy is almost similar to that of RIL and HMEL, but varies with IOC’s Panipat refinery by about INR 100/t. It may also be observed that among various refineries of IndianOil, pet coke price is generally at much higher level at its Panipat refinery, while it is the lowest at Paradip.
By Aditya Sinha
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