Coal news and updates

Cement makers face jolt as lack of Saudi offering tightens pet coke supply

A number of Indian cement plants, which had recently started using imported petroleum coke to cash in on a sharp decline in prices, now find themselves in a spot as the availability of low priced material from Saudi Arabia belies market expectations, industry sources feel.

“A number of cement plants had started using pet coke from the last quarter of 2015 following a sharp decline in international pet coke prices. It was felt that supply of high sulphur pet coke from Saudi Arabia will continue to rise in coming months, but that has not happened and there is continued restricted availability. Some plants are now considering switching back to using South African steam coal,” a Kolkata-based trader told ICMW.

According to the trader, some cement makers had recently purchased small quantities of pet coke through stock-and-sale traders as they are not in a position to get the material directly from Saudi refiners.

Moreover, in anticipation of continuous and unrestricted availability of Saudi material, they had not contracted for even US Gulf Coast pet coke.

“Even though Saudi Arabian refiners had virtually stopped offering more than 400,000 tons per month of pet coke from February itself, it was anticipated that in coming months either the offer quantities will rise or some of the plants will stop using that material and there will be a balance in demand and supply. But nothing of that sort happened. Currently, there is a tight situation as far as high sulphur material from Saudi Arabia is concerned,” said another trader based out of Mumbai.

In the current situation, if a consumer wants to contract fresh imported pet coke material now, he will not get supply before June, as Saudi Arabian refiners are booked till May, the second trader said, adding that in case of supply from US Gulf Coast, it will take around 45 days for the material to arrive in India.

According to a compilation by ICMW, India’s pet coke imports in February stood at around 1.23 million tons (mt), up 22% from 1.01 mt imported in January. Of the total volume in February, around 413,000 tons came from Saudi Arabia, up from 367,000 tons in January.

The import from the US fell to around 528,000 tons in February from around 579,000 tons in January.

At the beginning of March, Saudi Arabian cargo was being offered at around $35 per ton CFR India, but later during the month, prices went up to $40 per ton. However, a trader said that he had last heard of a deal between $36 and $38 per ton CFR India for Saudi cargo sometime back.

Meanwhile, the quotes for US Gulf Coast pet coke has increased to about $45-47 per ton CFR India as on April 5 from a low of about $40-42 per ton quoted at the beginning of March.