By : Franyi Sarmiento, Ph.D., Inspenet, May 23, 2022
Following the Russia-Ukraine conflict, energy markets have been experiencing extreme volatility in terms of commodity prices and ongoing supply chain disruptions. Higher prices for, for example, coal and petroleum coke along with rising shipping rates are putting pressure on the operating costs of many industries around the world.
Global buyers are witnessing a significant spike in coal prices which have more than doubled in the last year, raising real supply fears in the global market. It is not only the financial penalties, but also the freight and high premiums that make fuel more expensive.
Indian petroleum coke producers raised their domestic prices in May amid tight supply and high global steam coal prices, with buyers finding the US$260/mt seaborne price more competitive against at the domestic price range of US$266-US$299. Buyers without long-term contracts (spot buyers) will face considerable price volatility as the fuel is more or less driven by the rally in coal. Traders expect domestic petcoke prices to decline in the near term if India’s intention to buy Russian oil at a discount comes through, easing the cost of petcoke production.
With supply tight and demand resilient, petcoke prices rose sharply in March after the start of the Russia-Ukraine conflict. Previously, USGC petcoke was not competitive in many Asian countries due to much higher freight costs associated with long distance travel compared to coal exported from Australia, South Africa or Indonesia. However, the huge price difference between coal and petroleum coke is gradually narrowing in India recently and traders are considering opting for this product in the international market this year.
Of the total 46.6 million metric tons of petroleum coke shipped, five countries: China, India, Japan, Mexico and Brazil cumulatively purchased close to 25 million metric tons (53%) and continue the same trend in 2022. Of the nearly 20m mt shipped in the first four months of this year, the top five buyers cumulatively accounted for a massive 50%.
Petroleum coke for fuel imports were slow during 2021 due to high price and tight supply. But it becomes competitive against coal again in 2022, as both coal and petroleum coke prices have come down a bit, making petroleum coke the preferred choice for certain users in the industry.
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