Petcoke Offers Stay at High Rates as International Supply Tightness is Yet to Ease

MARKET TREND

The latest state of affairs in respect to the Petcoke market is a typical instance of the popular saying—that no prediction is a good prediction, especially in the context of the commodity markets.

Just in the preceding week, a belief aroused among several market participants that prices of the refinery by-product were likely to drift downwards as refineries in the US that were undergoing maintenance shut-down gradually restarted one by one. But, in reality, their prediction did not materialize as full-fledged operations of the refineries under maintenance are expected to resume only in the second half of this month. As such, severe supply tightness continues to persist, resulting in the offers hovering at high rates.

At the time when acute supply tightness is prevailing in the international market, the international demand also has strengthened, especially due to higher consumption by China and Japan, thus putting the offers under the influence of intense upward pressure.

As far as Indian buyers are taken into consideration, the current offers from the key international markets were considered too high; and they thus preferred the domestic market for their purchases.

On the consumption side, the demand for Petcoke in India is substantially strong as all segments of user-industries have been using it as the primary fuel. Besides, there is no indication for the demand in the country to slacken in the near future.

PRICE TREND

With the acute supply tightness and strong demand ruling the key international markets, the offers have continued to hover at significantly high rates.

Offers for Petcoke (6.5% Sulphur) from USA were reported at around USD 118/MT, a rise of around USD 6/MT over the offers reported in the last week. In a similar trend, offers for Petcoke (9% Sulphur) from Saudi Arabia were reported to go up this week to around USD 112/MT CFR India, up by around USD 4/MT over the week-ago offers.

Source: CoalMint Research

In India, Reliance Industries Limited (RIL) did not revise its prices with effect from 1Apr’18 as there was no down slide in the international offers. RIL, the largest Petcoke producer in India, has maintained its ex-works price at INR 8,950/MT. Essar, the second largest producer in the country, also has retained its ex-works price at INR 8,935/MT.

Source: CoalMint Research

Unlike its peers, Mangalore Refinery and Petrochemicals Limited has hiked its ex-works price, with effect from 1Apr’18, by INR 550/MT to INR 7,860/MT, apparently due to the strong demand prevailing in the country.