Petroleum coke prices jumped this week because the war in the Mideast Gulf raised freight rates and heavy crude costs and threatened to choke off Saudi Arabian fuel-grade supply for an unknown period.
Prices on an fob US Gulf basis had already been moving up for three consecutive weeks as of the last assessment on 25 February. A trader was heard to have purchased a cargo in the latter half of last week, before the US and Isreal launched strikes on Iran on 28 February, at slightly below $90/t. This was about $5/t above the Argus fob US Gulf 6.5pc sulphur assessment on 25 February.
Activity was relatively light, since many in the US Gulf market were awaiting an upcoming industry conference next week for an opportunity for face-to-face dealmaking. Many were also looking for the final index price for February to calculate their term contract costs for March-loading cargoes.
But with the news over the weekend of war breaking out in the Mideast Gulf, "everyone is worried to remain short", a trader said.
A second trader reported he had turned down a firm bid in the mid-$90s/t fob, suggesting the market has jumped by more than $10/t from the last assessment. But another said that traders turning down these fixed price bids does not necessarily mean the market is higher than that. It rather reflects caution, as their costs are index-linked with significant premiums in a period of high volatility. If the March index rises to the mid-$90s/t, many traders will have to pay refiners nearly $100/t for cargoes loading next month under their term contracts.
"A lot don't want to sell fixed right now," the third trader said. "It's kind of a wait and see game. Right now is not the time to buy something if you don't have to."
"It's bad if someone needs to buy this week or next week," a fourth trader said. But this trader thought many would be able to take a step back and wait to see if the situation is quickly resolved and supply normalizes.
"Honestly, I think this will scare away the market," the fourth trader said.
Indian buyers have largely been staying out of the market for weeks, as coke prices have been expensive compared with coal. But some may have to buy soon if they cannot fully supply their needs with domestic coke and coal and seaborne coal supply. Seaborne coal prices have also jumped since 2 March on energy supply fears, especially since QatarEnergy halted LNG production and gas prices spiked. The TTF day ahead natural gas price spiked by 66pc between 27 February and Tuesday to €53.30/MWh, although it dipped back down to €46.85/MWh by Wednesday.
Higher bunker prices also raised freight rates, and market participants said it is difficult to get shipowners to quote freight, especially to west coast India, which is close to the conflict region.
The ultimate effect on coke prices will depend on how long coal prices remain strong and whether there is a significant disruption in Saudi Arabian coke supply. Vessels looking to reach the Aramco/TotalEnergies' Satorp refinery in Jubail, which typically ships about 1.5mn-1.8mn t/yr of coke to China and India, must ship travel through the strait of Hormuz.
Supply has already been tight in the US Gulf because of lower refinery output. The US Energy Information Administration reported record low annual production last year, even below Covid-19-impacted 2021. This was partly because of permanent refinery closures, but also a narrower light-heavy crude differential that shifted producers away from the types of crude that produce higher volumes of coke. While refiners had said they expected to run heavier slates this year, those plans were formulated before the war blocked heavy crude exports from the Mideast Gulf region. Light sweet WTI crude's premium to WCS Hardisty narrowed to $13.51/bl on 2 March, its tightest level since late December 2025, and heavy sour grades generally strengthened compared with light sweet.
Fuel-grade petroleum coke exports from other origins that supplement US supply, like Venezuela and Mexico, have also been low so far this year. Venezuelan coke exports slowed after the US capture of Venezuelan president Nicolas Maduro on 3 January, and congestion at a Mexican port has also cut shipments from that supplier.
The million-dollar question is, ‘What to ask for April?'", another trader said.
