Venezuelan coke exports surge on port infrastructure

A large number of Venezuelan petroleum coke cargoes have become available in the seaborne market over the last couple of months after a solids handling system at the Jose port started up earlier this year, according to market participants.

The record-high prices for coke in the seaborne market have likely played a role in spurring the cash-strapped country to complete the infrastructure improvements. Seaborne coke prices at or above $200/t go a long way toward paying for terminal repairs or whatever else is needed to get operations running smoothly, one cement maker said last month.

Venezuela's state-owned PdV said in June 2017 that it was installing a "rail-veyor" system that would transport coke from large stockpiles to the port berth, bypassing an unreliable conveyor belt system and costly and time-consuming trucking. Coke moves from the stockpiles into cars on a light rail track, which then transfers it 2.5 miles (4 km) to be loaded onto barges and then into oceangoing vessels. This system also avoids draft restrictions and damaged shiploaders at PdV's original two coke-loading berths.

The company estimated at the time that the system would allow it to increase coke exports to about 200,000t/month, working down its tens of millions of tonnes of stockpiled coke within five years.

Now, five years later, the system is finally operational, sources say. And monthly exports in April, May and June could be approaching the predicted 200,000t/month rate.

The country's export plans were hamstrung by US sanctions on PdV implemented in 2019, which caused many international buyers to avoid purchasing its coke. Some cargoes have made their way to buyers in countries like China, Turkey and Tunisia in recent years, but exports have remained sporadic until recently.

Turkey imported 58,100t of 4.5pc sulphur Venezuelan coke in the first quarter, up from the 57,900t it imported in all of 2021 and compared with none in 2020, according to customs data compiled by GTT. China imported 137,700t in April alone, nearly as much as the 176,100t it received in July 2021-March 2022 combined. There had been no Venezuelan coke reported prior to that period.

Now, the "market is full of Venezuelan coke," one Chinese coke trader said.

But payment terms are more complex because of the international banking system's general unwillingness to deal with Venezuela. A cargo of Venezuelan petroleum coke waited on India's west coast for over three weeks early this year seeking to discharge, with buyers ultimately unable to meet payment terms despite the cargo's more than $60/t discount to prevailing 6.5pc sulphur prices. When a second cargo was recently sold to India, the Germany-based trader agreed to receive the entire payment basis discharge port, helping to minimise risk for the buyer.

Venezuela discount entices Indian buyers

While China was a top destination for Venezuelan coke in April and May, it is now increasingly being offered to India as buyers scout for cheaper alternatives to cushion the impact of record-high fuel prices.

A 28,000t cargo of Venezuelan coke arrived on India's west coast early this month, which may be only the second cargo to be purchased by Indian buyers in the last several years. Only one other 49,400t cargo arrived for an Indian cement market in October 2020, according to GAC Shipping data going back to 2015.

The May-arrival coke was booked towards the end of March at a price of about $220/t cfr India. This was as offers of April-loading Supramax cargoes of US 6.5pc sulphur coke were at an all-time high of $270/t cfr. Another cement maker on the east coast of India was heard to have recently booked at least one June-loading Venezuelan coke cargo between the mid $210s and $220s/t cfr. And at least one other cargo remains on offer to the Indian market.

Another change that could be related to PdV's new infrastructure is that buyers are receiving offers for larger cargoes. Venezuelan coke offers were until recently typically for smaller Handysize cargoes, carrying approximately 28,000t. A smaller coke cargo, at a discounted price to the two main high-sulphur origins — US and Saudi Arabia — suits small and mid-size buyers who prefer to reduce exposure in a highly volatile market. But offers of Supramax cargoes can potentially expand interest and encourage bigger cement makers to consider purchases.

At the same time, the delta between the Venezuelan and US coke offers has narrowed since the first trade this year.

Current prompt offers for Venezuelan coke are $220-$225/t cfr on the west coast of India for Supramax cargoes against offers in the mid-to-high $250/t range for the US material. This may suggest Indian buyers are becoming more comfortable with taking Venezuelan supply.

By Lauren Masterson and Ajay Modi