It is known that Reliance Industries Limited (RIL)’s petroleum coke price is considered as reference by most of the major suppliers and cement manufacturing customers in the country. This is due to the fact that RIL is by far the largest producer of pet coke with almost 50% of the country’s production.
RIL declares its pet coke prices on the 1st day of every month and in certain exceptional cases mid month revision is also carried out if there is a major variation in the domestic or international market.
Conceptually, RIL price is linked to pet coke CNF price on West Coast India, converted into Indian Rupees (INR) to adjust currency fluctuations. India’s major source of pet coke is USA for 6% Sulphur and Saudi Arabia for 9% Sulphur. Further local marketing conditions are also factored in for price finalization.
While, Nayara Energy (erstwhile Essar Oil), the third largest pet coke producing company having their refinery located at Vadinar which is approximately 10 km from RIL’s refinery at Jamnagar, keeps its price almost same with a nominal variation up to INR 10/MT. It also declares its price mostly on the 1st of every month, like RIL.
It has been observed during FY 2019-20 that the pet coke prices of the 2nd largest producer of pet coke, IndianOil (IOC), are not being declared on 1st of every month. It is normally declared around 4th-7th of every month, probably to consider and respond to the price revision of RIL. It is understood from the market participants that the logistic element is also considered in its pricing. Further, marketing factors like supply demand etc are also considered by pet coke suppliers to factor in the pricing.
Accordingly, pricing of Koyali refinery and Panipat refinery is based on logistics from the port in West Coast of India. These refineries have different logistics costs factored in it besides prevailing local marketing conditions. With regard to Panipat refinery, the logistics and local marketing conditions play major roles. It is further noted that price of HMEL refinery varies with IOCL Panipat within INR 100/MT. The Paradip refinery is linked to import parity price in East Coast of India. The local marketing conditions are also totally different like transport union issues, etc.
Similarly, Mangalore Refinery & Petrochemicals Ltd. (MRPL) also considers local marketing factors as vital. They are catering the markets mainly in Karnataka, Tamil Nadu and Andhra Pradesh. The marketing conditions for MRPL are very different and not linked to RIL price.
The price movements of pet coke for FY 2019-20 for the major companies are being shown graphically below. It may be noted that graph of Nayara Energy, price of which is almost same as RIL and HMEL price, which varies with IOCL Panipat refinery within INR 100/MT, is not being plotted here. The prices shown are all ‘general prices’. In other words, prices for rake/bulk or any specific price is not represented here.
It may be observed that during FY 2019-20, pet coke prices were at peak in Apr’19 for all oil companies and gradually came down. It bottomed out in Dec’19/Jan’20 before starting to rise in subsequent months.
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