Indian-delivered prices for seaborne petroleum coke have further increased amid supply tightness in the US Gulf Coast, coupled with a steady resurgence in import demand by cement manufacturing companies in India.
India’s domestically-produced pet coke prices have also firmed up over the past two months, as can be seen from the chart below.
With the gradual resumption of construction and infrastructural activities, the country’s demand for cement has recovered considerably in recent months. This, in turn, has been the major driving force for pet coke demand as it is mostly used in cement kilns.
Several major cement plants have already increased their production levels to well above 50-60%, while few others are ramping up outputs in line with the further easing of governmental curbs under “Unlock 3.0”. On the supply side, pet coke producing oil refineries have also ramped up their production levels by increasing crude throughput.
Even as cement manufacturers are actively scaling up production operations and thus limping back to normalcy, it would take some more time for pet coke demand to return to the ‘pre-Covid’ levels. This, however, clearly depends on flattening the Covid-19 infection curve in India.
Near-term Outlook
The increasing trend in international prices for pet coke has substantially driven Indian domestic prices up to high levels.
Market participants have now turned rather sceptical about sustainability of any further increase in domestic pet coke prices, primarily because South African thermal coal is becoming more attractive than pet coke among cement manufacturers.
In fact, some of the major cement producers have already reduced their purchases of both imported and domestic pet coke, and switched to using cheaper South African thermal coal instead.
Price Assessments
The current average price of US-origin pet coke (6.5% sulphur) is assessed at around US$ 82-83 per tonne (t) on CNF India basis, compared with US$ 72/t during the same week of last month. This indicates an increase of US$ 10-11/t over the past 4-week period.
Offers for Saudi-origin pet coke (9% sulphur) are presently hovering in the range of US$ 78-79/t CNF India, as against the last month’s price of around US$ 68-69/t. This also indicates an increase of US$ 10/t in last four weeks.
The US Gulf Coast (USGC) FOB price of pet coke (6% sulphur) – widely accepted as reference across international markets – has increased to US$ 42-43/t. This reflects an increase by US$ 7/t over the price of US$ 35-36/t prevailing in the last month.
Furthermore, shipping freight rates from USGC to Indian ports for Supramax vessel (50,000-55,000 tons deadweight (DWT)) has increased to approximately US$ 37/t over last month’s rates of US$ 31-32/t.
Reported by Aditya Sinha
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