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Indian petroleum coke buyers hug sidelines on higher landed costs

High landed costs for imported fuel grade petroleum coke kept Indian buyers on the sidelines as freight rates remain firm, sources said this week.

A west India-based trader, who was in the US last week, said freight rates are still going strong while FOB prices remain steady, boosting landed costs.

The FOB price for US petcoke with 6.5% sulfur is still at around $50/mt while Supramax freight rates from the US Gulf to India are being quoted at $32-$33/mt, he said.

Current offers are in the range of $81-$82/mt CFR west coast India while Indian buyers are bidding $76-$77/mt CFR.

"Nobody will get a cargo at $77/mt CFR," he trader said, but added that he expects prices to slide in the near term.

A west India-based end-user said his US petcoke shipments are already on the water to India and he is not currently looking to buy fresh cargoes.

"Freight rates have gone up but buyers are not getting discounts [on FOB prices] to this material," he said.

He said US Gulf petcoke with 6.5% sulfur cannot be procured below $78/mt CFR west coast India on Supramax vessels in the current market.

He pegged the Supramax freight rate from US Gulf to India around $31-$32/mt.

"'We are not buying US petcoke unless we get something between $70-$73/mt CFR west coast India," this source said.

A south India-based trader said several cement plants have switched to petcoke from coal because cost-per-CV value in petcoke made more economic sense than coal.

While high landed prices may have put a temporary clamp on deals, the moment prices soften, buyers will again make a "beeline" for US petcoke, he added.

A north India-based trader source said that due to high landed prices, enquiries have dried up and buyers are waiting for prices to correct downwards. He added he had not been offering any cargoes as market sentiment was low.

SAUDI PETCOKE

Meanwhile, Saudi petcoke with more than 8% sulfur is finding favour with Indian buyers because of its low prices and less lead time as compared to the US Gulf material, sources said.

The west India-based end-user said he had bought a Supramax shipment of Saudi petcoke at $61/mt CFR west coast India for August loading.

He added that as Saudi Aramco Total Refining and Petrochemical Company (SATORP) has started to run at full capacity, there is a lot more petcoke available at competitive prices.

SATORP is now producing 200,000 mt/month of petcoke and several new buyers have emerged planning to experiment with this material due to its relatively cheaper prices and shorter sailing distance, he added.

The first trader source said Saudi petcoke is being offered at $64/mt CFR and there are select buyers for this material due to its very high sulfur content.

The south India-based trader also said end-users have reportedly "found a way to handle the high sulfur content" in Saudi petcoke.

"India is a better market for Saudi petcoke logistically," he said.

Sources also said that due to its increased availability, Saudi petcoke can be procured in the high-$50s/mt CFR and some buyers were reportedly trying to close a few deals.

A second north India-based trader said offers for Saudi petcoke with 9% sulfur were at $64/mt CFR on a Supramax vessel basis.

The west India-based end-user said Saudi petcoke might pose a stiff challenge to US material going forward if it gains more popularity with end-users.

"At present, Saudi petcoke has taken over 25% of US petcoke market in just three-four months and so going forward, it can easily replace US petcoke," he added.

Platts assessed the weekly 30-60 day prices of fuel-grade petroleum coke with 6.5% sulfur at $79.25/mt CFR India East and $78.25/mt CFR India West, both unchanged from a week ago.

source: http://www.platts.com