Turkey on Monday terminated retaliatory tariffs on a range of US imports — including a 4pc tax on petroleum coke. This may increase US coke's competitiveness against coke and coal from other origins.
The government's removal of the US coke import duty, imposed in 2018, has already pushed cement makers in Turkey to seek new offers and restart negotiations for spot trades. But the full impact of the change will likely not become clear until the coming weeks as buyers are initially focused on tenders to be held this week from domestic refiners Tupras and Socar. After these tenders conclude, "many factories will start researching prices for petcoke supply," a cement maker said. And although the tax cut could theoretically reduce bids for domestic coke, "I expect there will be good demand and high premiums in this week's tenders," a trader said.
Buyers in Turkey remain cautious about quick changes as they have been unable to secure "workable" prices for US coke over the past few months. The 4pc tax cancellation is probably "not enough to attract more interest immediately" since US coke import prices are more than 4pc above where Turkish buyers would normally find them competitive with domestic coke and seaborne coal, but it will help it better compete with these alternatives, a trader explained.
The Turkish government also removed a 5pc tax on US coal, according to a market participant, which could in theory make this fuel more competitive as well. But Turkish buyers are likely to still favour NAR 6,000 kcal/kg Russian coal, which has been pricing at relatively low levels for months.
Cfr Turkey mid-sulphur coke prices reached a 2pc premium to NAR 6,000 kcal/kg cif Turkey Supra plus coal, mainly comprised of Russian supply, on a heat adjusted basis this month for the first time since early April, pushing cement firms to buy more Russian coal or smaller cargoes of domestic coke. The 6.5pc sulphur dry basis cfr Turkey price is now at a 1pc discount to coal, while typically buyers look for about a 20pc discount.
At the start of the week, indicative offers of high-sulphur coke from the US were at $102-103/t cfr Turkey against bids below $100/t cfr. Coal prices increased slightly late last week to $83.10-93.75/t, depending on cargo size, mainly because of higher freight rates. But this coal is still holding an advantage against US coke.
Offers for non-US coke origins that were not subject to import duties in Turkey, like Spanish, Russian, Venezuelan and Mexican coke, may now become less competitive as US coke will become 4pc less expensive, market participants said.
