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US Gulf Coast high sulfur petcoke faces downward pressures

US Gulf Coast high sulfur petcoke prices continue to face numerous downward pressures, but increased demand expected toward the end of the month could boost spot sales, sources said Wednesday.

A USGC refining source acknowledged weak petcoke markets while reporting a sale for a 50,000 mt, 6% sulfur petcoke cargo loading in August at $50/mt. The spot deal took place July 1, said the source, who noted prices could have declined since.

"If things have happened since then, there's a good chance the price will be lower," he said. "There is additional supply, China is not doing much, Europe is doing just-in-time buying and Brazil is stagnant."

Overall, the refiner's supply is balanced as most stocks are being used to fulfill term contracts and any additional supply would feed the spot market, he said.

"It feels pretty quiet to us," he said. "We are getting ready for contract season around the corner. We'll start looking at production, refinery maintenance and preparing for negotiations."

One North American cement buyer reported an offer of $50/mt for high sulfur petcoke, while also reporting a deal heard for export to India at $48/mt FOB. The same buyer had reported a deal at $50.50/mt last month.

"We do not plan to go into spot -- maybe in one or three months," he said.

A US fuel buyer agreed that prices, which Platts assessed at $54-$59/mt at the start of the year, have come down and have further to travel.

"I truly believe that as we get into this month that a number starting with a 4 is going to be real for a lot of deals," the fuel buyer said.

Platts assessed 6% and greater sulfur petcoke at $49-$51/mt, unchanged on the lower leg and down $1 on the upper leg, based on the reported deal, and assessed 5%-6% sulfur petcoke at $51-$53/mt, down $1 on the lower leg and unchanged on the upper leg.

Various factors are leading the price drop, notably Saudi Arabia's increased production from the Yanbu and Jubail refiners. Weak coal prices also are pushing petcoke demand down.

"The whole energy complex is coming down -- oil, coal and petcoke," said an Indian petcoke buyer. "Nothing is happening in the petcoke market."

India makes a "natural market" for the Saudi petcoke, the buyer said. The Saudis are testing lower-sulfur petcoke with lighter crudes that could produce 5%-6% sulfur petcoke eventually at a higher price, the US fuel buyer said.

"With that and the logistics to India, I would think they're definitely going to make an impact on US petcoke," he said. "But at the end of the day, the petcoke has got to move."

One positive for USGC refiners is the need for blending midsulfur petcoke with the higher sulfur Saudi petcoke. That is creating more demand for that product, the fuel buyer said.

"People need that product because of sulfur limitations at their plants or getting it into country," he said. "That's pretty much your Venezuelan material or some refineries in the USGC."

The end of India's monsoon season in September also could create more demand, he said.

The buyer expects to hear news out of Venezuela soon on its Petrocedeno terminal, which has been down since a fire last month.

Platts assessed 4%-5% sulfur petcoke out of the USGC at $57-$60/mt and Venezuelan 4% sulfur petcoke at $58-$59/mt, both unchanged on the week.

On the West Coast, weak Chinese demand was heard keeping prices at bay despite continued supply issues from low-sulfur petcoke producers.

A tender for 2% sulfur petcoke from Tesoro's Golden Eagle refinery was awarded for low-sulfur petcoke, but at an undisclosed price. A West Coast trader said he thought the cargo went for close to $100/mt.

Platts assessed USWC greater than 2.5% sulfur petcoke at $64-$77/mt, and assessed greater than 2.5% sulfur petcoke at $97-$105/mt, both unchanged on the week.

source: http://www.platts.com