The Indian cement industry, a key buyer of seaborne petroleum coke, is switching back from thermal coal to coke for the first time this calendar year because coke has regained its competitiveness following a sharp price decline.
The country's cement industry booked about 10-12 Supramaxes of high-sulphur coke, primarily US origin, over the last few weeks, said market participants. This roughly translates into a total booking of 600,000t, showing a significant uptick in appetite.
For comparison, cement plants imported 1.03mn t of coke over January-April, less than one-third of the 3.27mn t received in the same period in 2025, data from shipping agency Interocean show.
Most producers opted for the more competitive coal during January-April, especially high-CV NAR 6,900 kcal/kg Northern Appalachian (NAPP) coal from the US. India imported 3.65mn t of NAPP coal over January-April, up by 30pc on the year, according to trade analytics platform Kpler. Cement and brick kilns are the key users of this coal.
The Argus-assessed cfr India 6.5pc sulphur coke increased for the seventh consecutive week to a 27-month high of $129/t on 25 February on the back of firm fob coke costs, three days before the US-Iran conflict broke.
The conflict choked coke supplies from the 460,000 b/d Aramco/TotalEnergies' Satorp refinery in Saudi Arabia's Jubail because vessels can only reach the refinery on the Mideast Gulf coast by traveling through the strait of Hormuz. Coke output at the Saudi Aramco/Sinopec Yasref refinery in Yanbu, Saudi Arabia, was also heard to have been lower than usual in recent months. Jubail and Yanbu each typically ship about 1.8mn t/yr of coke.
The supply disruption, together with higher freight rates in the aftermath of conflict and tighter fob coke supply from the US Gulf, raised delivered India coke prices further. Delivered prices of 6.5pc sulphur coke increased for twelve straight weeks since the start of 2026 to hit a three-year high of $160/t on 1 April, rising by 24pc since the US-Iran conflict started.
Coke-thermal coal gap narrows
Coke stayed at a premium to NAPP coal for most of this calendar year so far, prompting buyers to look for coal. NAPP coal offered a consistent discount through January-May, with the gap between two fuels hitting $15-$20/t in May.
But this gap gradually narrowed since the end of May and almost disappeared early this month triggering an uptick in coke purchases. Offers of July-or August-loading coke Supramax cargoes are being made in the low-to mid-$130s/t cfr on India's west coast, while NAPP coal is being shown at $133-$134/t cfr.
NAPP coal attracts a lower import duty of 2.75pc against an 11pc duty on coke, which broadly offsets the calorific value (CV) differential between the two fuels. Delivered India prices of 6.5pc sulphur coke were last marked at $135.50/t on 3 June, down by 15pc from their recent peak.
Some cement plants that bought NAPP coal earlier to replace coke are selling coal from their port stocks at a profit of $5-$6/t in the retail market and booking coke cargoes as a replacement.
Fuel accounts for the largest share of input cost for cement producers at 30pc. A rise in fuel costs typically pressures producers' margins unless they can fully pass on the increase in cement prices. Producers have faced challenges in raising cement prices in recent years due to large capacity additions and a fight for market share.
Indian cement manufacturers use coke as fuel in their kilns, together with thermal coal. But cement firms have been buying less seaborne coke so far this year, while raising the share of domestic and imported coal in its fuel mix due to more competitive pricing.
India's largest cement producer, Ultratech, cut coke in its fuel mix to 41pc during January-March, down from 54pc in the same quarter of 2025, with the company raising its use of coal, the Bombay Stock Exchange-listed firm said in April.
The situation has reversed again. A procurement manager with a cement maker said that the company would choose coke and not coal if the firm needed to buy fuel in today's market because the decline has made coke competitive once again.
The rising preference for coke could temporarily pressure NAPP coal, especially because demand from brick kilns is typically limited during the monsoon months of July-September, said a market participant.
A trader expects limited downside for the delivered India price of NAPP coal because its production and inland transportation cost has increased due to higher fuel prices, and freight rates have remained elevated. But higher utilisation rates at US refineries and increased coke supply continue to put pressure on fob coke.
US Gulf high-sulphur coke assessed by Argus dropped below $80/t fob for the first time since early February to hit $79/t on 3 June.
