India: Pet coke consumption rises 23% in Jan-Aug’22 amid demand revival

India’s pet coke production for January-August 2022 stood at 10.51 mnt, up by 19% y-o-y, whereas its consumption rose by 23% y-o-y to 10.5 mnt. This growth in pet coke production has come due to improvement in construction activities that remained quite dull in the past two years due to the Covid pandemic.

With the government’s thrust on infrastructure projects in February’s Budget, the demand for cement gained momentum in the construction season of March-June this year. About INR 7.5 trillion for FY2022-23 was allocated to the sector, which is 35% increase over the previous year’s outlay.

Indian cement producers that had switched to cheaper Australian thermal coal in the past two years were back to using pet coke as a fuel this year. Moreover, sanctions on Russia resulted in its increased demand, especially from Europe, Japan, and South Korea which made its high-CV thermal coal prices touch as high as $400/t.

Imported pet coke prices rise this week

Imported pet coke prices that have been falling since June have started rising with increase in restocking demand post-monsoons. The price of Saudi Arabia and the US-origin pet coke are currently assessed in the range of $185-190/t CFR India, up by $10-15/t against last week.

Meanwhile, till July, Venezuelan pet coke that was being offered cheaper against Saudi and US origins, is now being offered in a similar range.

In case of thermal coal, Russian high-CV thermal coal prices have also increased and are currently heard at $200/t CFR India levels while Australian 5500 NAR prices are at $220/t CFR India.

However, if we analyse fuel cost per 1,000 GCV basis, pet coke is still cheaper at $24 per 1000 kcal/kg, while Russian coal is at $33 per 1,000 kcal/kg and Australian coal is at $40 per 1,000 kcal/kg.

Outlook

Cement demand is expected to grow by 7-8% to around 382 mnt in the current fiscal amid expectations of strong demand from rural housing and infrastructure sectors, as per market reports. This may boost the country’s pet coke production and consumption in the upcoming months also.