A few Venezuelan petroleum coke cargoes that are already on the water or under loading are desperately looking for homes following the reimposition of US sanctions on the country's oil sector, resulting in aggressive offers to buyers in the key market of India.
A cement maker on India's west coast was offered an end-May arrival cargo of Venezuelan coke at $104/t cfr, about $7-10/t below the lowest offers heard this week for Supramax cargoes of US 6.5pc coke loading in May-June. "We are considering closing this somewhere in the low-$100s/t cfr with all the possible checks in place to minimise chances of a default or non-performance," a procurement executive at this cement maker said. Other Indian market participants agreed there have been a number of Venezuelan coke cargoes offered at around $105/t cfr India's west coast.
But these relatively low offers could be from trading firms that are relatively new to the market, while offer indications from more established Venezuelan coke sellers to the Indian market were higher.
"We had heard of very low offers for Venezuelan coke early this year too as more players wanted to trade in this origin, but honestly there was just a single deal at those levels," one trader commented, saying that more realistic prices for Venezuelan coke were in the mid-$110s/t cfr west coast India given current freight rates.
Some of these offers were likely coming from China-based traders, said another participant, adding that Chinese sellers would not typically agree to Indian buyer's request to take payment after the cargo is delivered and discharged, while Indian firms would want to have such a clause to avoid any default or non-performance.
Banking on it
It is understood that at least four Indian cement makers have approached a leading private Indian bank to open a letter of credit (LC) after sanctions resumed following the end of the US' six-month waiver. The US administration has set a deadline of 31 May for most foreign companies to wind down business with Venezuelan state-owned oil firm PdV.
But some Indian banks had been opening LCs for Venezuelan coke even before the US sanctions were temporarily relaxed in October, so this is not a hindrance yet, a market participant said.
Sellers rely more heavily on India
More sellers sought out Indian buyers in recent months as Mediterranean buyers backed away, anticipating the end of the sanctions waiver. But although some Indian buyers had been purchasing Venezuelan coke while sanctions were in place over the past four years, the latest US decision to restore sanctions is still expected to reduce demand.
Indian buyers were already inundated with offers for Venezuelan coke in February, and Venezuela became India's second-largest fuel-grade coke supplier in March, surpassing Saudi Arabia, according to data from shipbroker Interocean. Venezuela provided 15pc of cement makers' imports last month at 152,300t, although this was down from 158,650t in February.
Venezuelan coke exports look to have remained high in March despite reports of slower loading, which would explain the large number of offers to Indian buyers in recent weeks.
But some larger firms are unlikely to accept even widely discounted Venezuelan coke. These buyers had only started buying this coke as an alternative to US and Saudi Arabian supply following the waiver last year. With sanctions back in place, Venezuelan sellers will likely be appealing to a smaller pool of buyers, forcing them to offer bigger discounts than they have in recent months.
