Coal news and updates

Weak crude eases imported pet coke prices

December 22: Prices of solid fuels like petroleum coke and steam coal have declined sharply in recent days, taking a cue from the sharp fall in crude oil prices that have significantly reduced seaborne freight rates for transportation of such commodities, industry sources said.

“Today, pet coke is available at about $86 per ton CIF India (as on December 20) from a high of around $95 per ton in September-October,” an official from a cement company which is the leading importer of steam coal said.

He, however, clarified that his last purchase of imported pet coke of one parcel, towards end-November, was at $88 per ton CIF Mundra Port. “The other cargo, which we had initially purchased for loading in December and which was deferred to delivery in January, was procured at $90 per ton CIF,” he added.

According to him, much of the softness in solid fuels is because of softness in freight rates.

As per data compiled by ICMW, freight rates from the Richards Bay Coal Terminal (RBCT) to India (west coast) had slipped to $12.65 per ton for Panamax vessels as on December 18, 2014 from a high of $16.80 per ton at the beginning of November, 2014 indicating a decline of nearly 25%.

Similarly, the freight rates from Indonesia (Kalimantan) to India (east coast) have declined to $7.50 per ton from a high of $10.30 per ton during the same period.

Asked if there was any relation between the decline in crude oil prices versus the decline in pet coke prices, the official said, “Pet coke is down because of a decrease in freight rates. In fact, freight rates are down because of the softening in crude oil prices even though there is no relation between crude oil and pet coke prices.”

Though pet coke is made in refineries and the feed stock is crude oil, there is no relation between the prices of two, he pointed out.

Meanwhile, industry experts told ICMW that at present oil producing companies, including Russia and Venezuela, are facing difficulties due to severe decline in crude oil prices.

“Today, majority countries in the world are beneficiaries of soft crude oil prices. Even crude oil producing OPEC countries are benefiting because of the low cost of oil in some way or the other,” the experts said.

The soft trend in crude oil is keeping prices of other materials low, they said, adding, most of the oil producing countries are importing the rest of their requirements and so the cost of their imports is overall coming down.

“These countries practically produce nothing and depend almost entirely on imports for meeting their other requirements and as such they are getting benefitted in terms of lower cost of imports because all of them are paying low freight rates,” the expert said.

“There are some natural rules and even the oil exporting economies are reaping the advantages of the softness in crude oil prices in terms of reduction in the cost of living or industrial growth,” the expert added.