- Petcoke replacement costs rise amid stronger global competition
- US coal retail stocks halve as post-monsoon demand approaches
India’s industrial fuel market is tightening entering September, with imported petcoke, domestic refinery petcoke and US Northern Appalachia (NAPP) coal all becoming more expensive.
The timing is significant. Cement production has remained strong despite the monsoon, while fuel demand should strengthen as construction activity recovers. Yet petcoke faces firmer international demand and high freight, while immediately available NAPP retail inventories have fallen by more than half in two weeks.
The result is a narrowing of the fuel-switching advantage available to Indian cement producers.
Imported petcoke moves higher
US Gulf Coast petcoke prices have strengthened, with higher ocean freight adding to delivered costs into India. USGC 6.5%S petcoke FOB increased from $84-85/t on 25 August to around $88/t on 2 September, while USGC 5.5%S petcoke FOB rose from $88-89/t to around $92/t over the same period. Meanwhile, CFR India 6.5%S petcoke increased from around $149-150/t on 28 August to $151-155/t on 2 September, with India market indications reaching $153-160/t CNF by 4 September.
USGC-India petcoke freight was around $60/t on 2 September, compared with around $55/t in early September, approximately $6/t above the 2026 average. By 4 September, Indian cement-sector indications were largely in the mid-$150s/t CNF, although several buyers were reluctant to chase prices higher.
China and Turkey are adding competition for US barrels. USGC shipments to China increased from around 0.11 mnt in January to more than 0.55 mnt in August, while Turkish cement producers have also been seeking petcoke as competing high-CV fuels tightened.
Indian refinery prices also rise
Domestic petcoke is providing only partial relief. Nayara’s petcoke price increased from INR 18,090/t in August to INR 18,780/t in September, up INR 690/t, while MRPL rake prices rose from INR 14,690/t to INR 15,370/t, up INR 680/t. MRPL road prices also increased from INR 16,620/t to INR 17,300/t, up INR 680/t. BPCL maintained prices at INR 18,000/t at both Bina and Kochi, unchanged from August.
Nayara and MRPL raised September prices, while BPCL maintained its levels. MRPL availability has also been restricted by refinery maintenance.
India produced 1.18 mnt of petcoke in July against consumption of 1.66 mnt, meaning domestic output covered around 71% of consumption.
Imported petcoke has meanwhile become progressively more expensive, with US-origin 6.5% sulphur material CNF Vizag averaging $137/t in June, $140/t in July and $147/t in August.
Cement demand remains resilient
The increase in fuel costs comes despite monsoon conditions.
India’s cement production rose 13.1% y/y to 42.3 Mnt in July, taking April-July production to 172.6 Mnt, up 9.9%.
But average cement prices fell around 2% m/m to INR 345/bag in July. August pan-India prices remained around INR 348/bag, while demand grew by mid-single digits y/y.
Cement producers are therefore facing higher fuel replacement costs without a comparable improvement in cement realisations, increasing the incentive to optimise between petcoke and coal.
NAPP prices rise sharply
NAPP has traditionally provided an alternative when petcoke becomes expensive, but its own economics have tightened. India retail indications increased from INR 14,600-14,850/t on 18 August to INR 16,100-16,200/t in reported trades on 1 September, while seller offers on 1-2 September reached INR 17,100-17,500/t. Reported trades were at INR 14,200-14,300/t on 19 August and INR 14,500-14,600/t on 25 August. USEC-India Panamax freight was around $55/t on 3 September. Higher FOB Baltimore prices and US East Coast-India freight of $51.75/t lifted replacement costs.
But the sharp retail increase also reflected a physical inventory squeeze.
NAPP retail stocks halve in two weeks
NAPP retail stocks at Kandla and Tuna fell from 147,695 t on 17 August to 97,590 t on 24 August and 72,813 t on 31 August, leaving inventories at less than half their level two weeks earlier. Between 17 and 31 August, stocks fell by almost 75,000 t.
Lifting remained substantial, at 36,379 t in the week ended 17 August, 56,655 t in the week ended 24 August and 39,776 t in the week ended 31 August.
The inventory drawdown provided a physical explanation for the retail price increase, with prompt NAPP stocks already heavily depleted before the full post-monsoon demand recovery.
Incoming US supply could change the balance
The bullish retail picture nevertheless has an important counterweight. A substantial US coal cargo pipeline is scheduled to reach India through September-October.
These future cargoes should not be confused with the 72,813 t of immediately available retail stock at end-August. But once discharged and released into distribution, additional NAPP supply could ease retail tightness and limit further price escalation.
That creates a race between inventory replenishment and recovering post-monsoon demand.
Outlook
India’s cement industry is entering the post-monsoon period with fewer cheap fuel alternatives.
Imported petcoke faces support from stronger international competition, elevated USGC-India freight and constrained domestic refinery availability. NAPP is also expensive, with high USEC freight compounded by sharply depleted retail inventories.
Additional NAPP arrivals could ease the immediate shortage, but cement demand should simultaneously strengthen.
The key market signal is therefore broader than either petcoke or NAPP alone: India’s major high-CV cement fuels are strengthening together, narrowing the economics of fuel switching and raising replacement costs just as post-monsoon industrial demand begins to recover.
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