Indian cement producers are likely to remain active in the seaborne fuel-grade petroleum coke market in 2023 after more than doubling their 2022 imports from a year earlier.
Cement producers received 5.65mn t of petcoke during January-October 2022 against 2.67mn t in 2021, according to data from shipbroker GAC. Full-year 2022 imports may well exceed 7mn t, said a market participant, comparable or slightly higher than the 7.1mn t imported in 2020.
Petcoke prices have been at a steady discount compared with thermal coal from most origins throughout 2022, as a recovery in demand, weather-related supply disruptions and the Russia-Ukraine conflict tightened supplies of LNG, supporting the coal market. A recovery in economic activity and travel also pushed up refinery runs in major coke-producing countries, increasing supplies.
"We can broadly expect this trend to continue into 2023," said an executive with a multinational trading firm. "Since gas prices are expected to remain firm because of supply-side issues, there will be support for the coal market and petcoke is likely to remain an economical fuel."
Petcoke prices fell to a record discount in 2022 compared with prices of the Australian and South African mid-calorific value (CV) coal that Indian cement producers typically use, reducing these origins' market share. Companies are now largely focused on petcoke unless they see opportunities in the coal market, as they had at times in 2022 with coal from Russia and Mozambique.
Indian cement producers experimented with high-CV Russian coal in their kilns around mid-2022 when petcoke prices were stubbornly high and coal prices from most other origins were also at historical highs.
India's largest cement producer Ultratech in early June paid 172mn yuan for a Capesize cargo of Russian NAR 5,500 kcal/kg coal, then equal to $25.78mn, which translated into a delivered India price of about $164/t, according to a customs document. Cfr India 6.5pc sulphur petcoke prices were at a near historical high of $247/t on 1 June, making Russian coal about 10pc cheaper even when factoring in coke's higher CV of around NAR 7,500 kcal/kg.
But petcoke prices then began to fall, until reaching a low of $164.50/t cfr India for 6.5pc sulphur material on 24 August. Russian producers also could not cut delivered coal prices further as freight costs remained high.
Buying interest grows
The fall in petcoke prices during the third quarter of 2022, on a combination of cheaper alternatives like Russian coal and Venezuelan petcoke, brought cement producers back to the market. Multiple US petcoke cargoes were booked in August and early September when prices fell to intra-year lows. Cement producers received about 926,000t of petcoke in October, the highest in a single month since May 2020 when about 1mn t petcoke arrived at Indian ports and a more than a fourfold increase from 220,000t received in October 2021.
But petcoke prices are still high on a historical basis and cement producers have struggled to pass on these costs to cement buyers. Buyers will likely exercise extra caution in fuel purchases in 2023 to keep costs in check.
Another driver behind the rise in Indian petcoke imports has been reduced domestic availability.
Indian private-sector refiner Reliance Industries (RIL) cut petcoke sales in 2022 as it increased its petcoke gasification capacity.
RIL sold about 200,000 t/month of petcoke in early 2021 after feeding its gasifiers, reducing this to 80,000-100,000 t/month by the end of 2021. For most of 2022 it sold 25,000-35,000 t/month on average. RIL has imported at least three petcoke cargoes from Saudi Arabia since August, adding to India's import requirements.
