Indian cement manufacturers using pet coke and Australian thermal coal as fuel are suspending their raw material purchases despite a significant fall in their prices, sources informed CoalMint.
Imported pet coke prices in India registered a fall of $50-55/t in December as the supply scenario from USA improved and crude oil and thermal coal prices corrected from their peaks amid the Omicron scare.
Price of the US-origin (6.5% sulphur) pet coke is currently assessed at $170/t CNF India, whereas Saudi-origin (9% sulphur) is at $145/t CNF India.
Indian cement producers started using Australian coal since last year when the country’s coal prices fell to an all-time low (post-China’s ban on Australian imports). However, demand for Australian coal has turned sluggish since the past month.
Australian offers for 5500 NAR are currently heard at $98-99/t against their peak of $130/t in October. However, no major deals have been heard as bids are at $90-91/t, FOB Newcastle.
CoalMint’s data shows that only 0.35 mn t of pet coke are set to arrive at Indian ports between 15 Dec’21 – 23 Jan’22 while only 0.91 mn t are arriving from Australia against a monthly average of 1.2 to 1.5 mn t.
Why have buyers moved to sidelines?
Despite pet coke and thermal coal prices registering a reasonable decline from their peak levels, Indian cement manufacturers have taken a backseat from booking imported material amidst tepid cement demand.
While October to May are usually seen as a boom period for cement demand, this year has been an exception due to unexpected heavy rains in the southern and western states, sand mining issues in the eastern region, ban on construction activities in the northern states (as a measure to curb pollution) and limited labour availability.
Another factor worrying Indian cement manufacturers is the rising number of Omicron cases that has prompted them to postpone their bookings.
“We have kept raw material stock for 1-2 months and are analysing the demand situation for making any future bookings. At present, everything is quite uncertain as Omicron cases are rising in India and we do not know if the government would come up with any restrictions in the upcoming month,” said a southern India-based cement manufacturer.
Short-term outlook
With Omicorn cases rising across the globe, imported pet coke prices are likely to fall further. But, the Indian cement sector’s fuel demand too may remain under pressure if cases show an upward trend and lockdowns are imposed again.
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