India: Higher prices pull down pet coke demand by 12% in April; output falls marginally

Amid elevated petroleum coke prices since late-last year, domestic consumption registered a 12% m-o-m fall to 1.2 million tonnes (mnt) in April 2022, while production fell marginally by 6% m-o-m to 1.3 mnt, as per CoalMint data. The output volumes in April 2022 also surpassed the levels of the pre-Covid period (April 2020) by 6%, indicating a full recovery of the domestic market since 2020.

During FY22 (April 2021-March 2022), domestic petroleum coke output registered a strong 23% y-o-y rise to 14.8 mnt.

Surrounding elevated global thermal coal prices, pet coke prices also rose sharply by 90% on a y-o-y basis, as US-origin prices with 6.5% sulphur are at $248/t CFR basis, while that of Saudi-origin pet coke with 9% sulphur are at $245/t CFR.

However, despite elevated prices, the cement sector preferred opting for pet coke over thermal coal due to the latter’s volatility following the Russia-Ukraine crisis.

Infrastructure push supports higher pet coke imports

As per CoalMint data, pet coke imports have risen by a whopping 85% y-o-y to 3.3 mnt in the first five months of the year surrounding the rising construction activity during this period.

Thermal coal imports, on the other hand, have fallen by 61% y-o-y to 3 mnt in the period under review.

With the government’s thrust on infrastructure projects, demand for cement has gained momentum in this ongoing construction season.

The Directorate-General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry allowed the import of pet coke for only select industries such as cement, lime kilns, calcium carbide, and gasification industries.

Further, the annual import quota for raw petroleum coke is fixed at 1.4 mnt and aluminium industries will import 0.5 mnt of calcined petroleum coke, thus, limiting the overall import quantity.

Short-term outlook

With the recent decline in domestic steel prices, cement demand is likely to gain strength with higher infrastructure push by the government. Pet coke output will remain strong till June before the monsoon season hits construction activity.