US petcoke and coal markets witness dislocation as supplies get diverted from India

• US petcoke unviable for India as CFR costs surge
• US thermal coal flows to Pakistan due to price restrictions

The market for premium solid fuels like petroleum coke (petcoke) and high-calorific North Appalachian (NAPP) coal is experiencing a significant dislocation, with available supply being redirected away from India-traditionally a key import market-due to more attractive domestic and alternative international opportunities.

For US Gulf Coast (USGC) petcoke, a stark price disparity has effectively blocked the trade route to India. Market intelligence suggests that the PACE index for high-sulfur, fuel-grade petcoke for December is likely to be priced around $72/t FOB. Even with standard premiums and freight costs factored in, the delivered (CFR) cost to India would exceed $122/t. Traders and analysts conclude that at current levels no USGC petcoke will reach Indian shores anytime sans a dramatic price correction.

Simultaneously, the high-quality NAPP thermal coal market is witnessing a similar diversion. A recent sale of an Ultramax cargo of NAPP coal to a buyer in Pakistan was reported at approximately $118/t CFR. Crucially, this deal was facilitated by the US producer with a “special” price that carried a strict destination restriction prohibiting its delivery to India. Market sources indicate the freight for this shipment was covered at $38.75/t, implying an FOB Baltimore price in the mid-to-high $70s. For the Indian market, however, the producer is reportedly seeking a much higher price of $80.50 FOB for January loading.

The rationale behind this market split is clear: robust domestic US demand and producer awareness of global price differentials are creating preferred sales channels. “US producers are very busy with domestic demand and is fully aware of the price differentials in India,” a market participant noted, adding, “We can forget about NAPP to India in the near future.” This leaves Indian buyers, particularly in the cement and industrial sectors, facing a narrowed field of options.