Petroleum (pet) coke import prices have substantially increased over the past three-week period, while Indian demand has largely collapsed due to competitively priced thermal coals and exorbitant freight rates.
The Indian market has been lately observing a considerable decrease in enquiries for seaborne pet coke, alongside lesser number of spot transactions other than existing long-term contracts (LTC). Indian cement companies typically procure part of their pet coke imports through LTC.
Presently, however, major Indian cement producers have been largely refraining themselves from making spot bookings of seaborne pet coke in consideration of unviable prices and supply uncertainty, particularly for US-origin material.
At the same time, the Indian cement industry has been temporarily switching to imported thermal coal like Australian high-calorific value (CV) and US mid-CV varieties as alternative fuels, which are relatively cheaper.
Notably, imported thermal coals on a comparative heat-value basis from the above-mentioned origins are available to Indian end-users at prices as low as $85-107/tonne (t) for Indonesian 4,200 GAR and South African 5,500 NAR RB2 coals respectively.
Imports subside sharply on subdued buying interest
India’s pet coke imports decreased sharply by 64.8% y-o-y to 1.78 million tonnes (mn t) in Jan-May’21, compared with 5.05 mn t during the corresponding five months of last year, as per vessel lineup data compiled by CoalMint.
This is understood to have been primarily driven by reduced usage of high-priced pet coke and increased coal consumption in the fuel mix by cement producers to manage their production costs.
Price assessments
The current average prices of US-origin pet coke, with 6.5% sulphur content, are assessed at $144-145/t on CNF India basis, as against the earlier prices of $130-131/t, an increase of $14/t in this month so far.
Offers for pet coke from Saudi Arabia, with 9% sulphur content, are presently assessed at around $131-132/t CNF India, up by $7/t compared with $124-125/t prevailing at the beginning of the month.
The US Gulf Coast (USGC) FoB prices of pet coke (6% sulphur), widely accepted as the reference across international markets, have increased by $11/t to $93-94/t, compared with $82-83/t at the beginning of this month.
Average shipping freight rates from USGC to Indian ports for Supramax vessels of 50,000-55,000 deadweight tonnes (DWT) are currently assessed at $54.50/t, compared with $44.50/t at the end of last month, an increase of $10/t.
Outlook
Even as Indian cement players await price corrections in the international pet coke markets, not too much is expected in the short term because of tight availability in key source markets like the US and Saudi Arabia.
Going forward, Indian market participants expect a further decrease in the country’s pet coke import volumes with consumers increasingly switching to thermal coal.
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