Indian Petcoke Business in the Usual Mode, Despite Possible Ban on the Cards

Petcoke business in India is going on in the usual way, with buyers as well as sellers being least bothered of the possible ban on usage of the fuel, initially in the Delhi/NCR, due to its polluting effects.

CoalMint tried to assess the resultant market sentiments after the news of a possible ban on Petcoke usage surfaced last week.

According to the information gathered by CoalMint, the Ministry of Environment, Forests and Climate Change is considering banning usage of Petcoke, in the Delhi/NCR to begin with, on the recommendation of the Environment Pollution Control Authority (EPCA).

The EPCA has stated that usage of Petcoke raised pollution to alarming levels in the region that needs corrective action. The authority has recommended the ministry to ban the polluting fuel to bring pollution under control. However, the authority has kept the cement manufacturers out of the purview of the ban, which will impact a number of user segments, like textile, chemical, paper and captive power generation.

The rationale behind exclusion of the cement manufacturers lies in the fact that the cement plants are equipped with pollution neutralizing mechanisms.

The ban will be initially applied to the Delhi/NCR, and a nation-wide ban is yet under deliberation.

Market participants, spoken to by CoalMint in the implied context, said that a complete ban on Petcoke is not possible, considering the positive aspects of the fuel.

Petcoke is nevertheless an efficient fuel, with calorific value higher than coal. In terms of costs also, Petcoke scores over coal by being cheaper.

IMPACT ON END-USERS

The user-industries, after the ban coming into force, will have to use Thermal Coal, produced by Coal India Limited, and is abundant domestically. Imports of Petcoke will come down, and, needless to say, that imports will be done by the cement producers only.

PETCOKE (Fuel Grade) IMPORT TREND IN INDIA

Source: CoalMint Research

On the other hand, the domestic production of Petcoke will be able to meet the consumption of cement manufacturers.

Source: CoalMint Research

COALMINT COMMENT

Considering the rationale behind the possible ban—the polluting effect, the benefits of using the fuel could be retained by allowing usage of the low Sulphur Petcoke, which are very less polluting.

Pollution from Petcoke emanates from the constituent Sulphur. Saudi Arabia origin Petcoke is characterized by constitution of high Sulphur levels, which cause pollution. To preserve the advantages of using Petcoke, the ban could encompass low Sulphur Petcoke, including Saudi Arabia origin, while domestic as well as USA origin Petcoke could be excluded from the ban.

Indian refineries produce low Sulphur Petcoke, which is comparable with that produced by American refineries.